Tags: Cotton | Record | China | Cold | Spell

Cotton Jumps 4.2 Percent to Record as China Cold Spell Threatens Crops

Monday, 25 Oct 2010 01:09 PM

Cotton soared to a record, rising the maximum allowed by ICE Futures U.S. in New York, as a cold front threatened to damage the crop in China, the world’s biggest user of the fiber.

A cold spell that started yesterday will last until tomorrow and may hurt fields, the China Meteorological Center said. Prices climbed 9 percent last week, the third straight weekly gain, as storms dropped damaging hail in Texas, the biggest cotton-growing state in the U.S., the world’s largest exporter. The U.S. Department of Agriculture forecasts a 4.3 percent drop in global stockpiles in the year ending July 31.

“The market is reacting to the news from China and what has happened in Texas,” said John Flanagan, the president of Flanagan Trading Corp. in Fuquay Varina, North Carolina. “Even at these prices, we are witnessing strong demand.”

Cotton for December delivery rose by the daily maximum of 5 cents, or 4.2 percent, to $1.2471 a pound at 10:12 a.m. on ICE. That’s the highest level since the fiber started trading 140 years ago.

Flanagan expects prices to rise to $1.30.

Before today, futures soared 58 percent in New York this year, making it the best-performing commodity on the Thomson Reuters/Jefferies CRB Index.

“Cold weather in China’s cotton crop-growing area has stoked concern over production damage,” pushing prices in Zhengzhou to all-time highs, said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co.

U.S. Storms

U.S. cotton stockpiles will drop 8.5 percent in the year that began Aug. 1 from a year earlier, the U.S. government forecast on Oct. 8.

“Concern over damage to the U.S. crop came amid increasing demand prospects, especially from China, where the market sees a drop in output,” said Han Sung Min, a grain-futures broker at Korea Exchange Bank Futures Co. in Seoul.

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Cotton soared to a record, rising the maximum allowed by ICE Futures U.S. in New York, as a cold front threatened to damage the crop in China, the world s biggest user of the fiber.A cold spell that started yesterday will last until tomorrow and may hurt fields, the China...
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2010-09-25
Monday, 25 Oct 2010 01:09 PM
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