Cotton Rises to Four-Week High as U.S. Supplies Ebb; Orange Juice Declines

Cotton rose to a one-month high as the lowest stockpiles since 2004 in the U.S., the world’s largest exporter, signal textile makers are buying now rather than waiting for the next crop. Orange-juice futures gained.

Cotton inventories monitored by ICE Futures U.S. have plummeted 96 percent since June 2 to 47,571 bales on July 29, the lowest level since December 2004. While the government forecasts a 50 percent jump in U.S. production this year, most farmers won’t start harvesting until October.

“You’re hard-pressed to find cotton right now, and this is very unusual, historically,” said Peter Egli, the director of risk management in Chicago for Plexus Cotton Ltd., a U.K.-based merchant. “The market is trying to figure out when we will finally have enough cotton.”

Cotton for December delivery rose 1.85 cents, or 2.4 percent, to close at 78.76 cents a pound at 2:30 p.m. on ICE in New York, the biggest gain for a most-active contract since April 20. Earlier, the price reached 78.94 cents, the highest level since June 28.

U.S. farmers will harvest 18.3 million bales in the 2010- 2011 marketing year that starts Aug. 1, up from a two-decade low of 12.2 million a year earlier, the USDA said July 9. Global production will jump 13 percent to 116 million bales, according to the USDA. A bale weighs 480 pounds, or 218 kilograms.

Rising Demand

In the year ending tomorrow, global demand probably will grow 6 percent to 116.55 million bales, according to the USDA.

“We need our warehouses to move cotton quickly enough to meet strong demand,” said Joe Nicosia, the chief executive officer of Allenberg Cotton Co., the largest U.S. merchant.

U.S. export sales of upland cotton for the week ending July 22 were 2.3 million bales, up 65 percent from a year earlier, for the marketing year ending tomorrow.

“The pace of U.S. exports over the last 10 weeks has been exceptionally good, but at today’s values, that level may slow down,” Nicosia said.

In another ICE market, orange-juice futures for September delivery gained 0.4 cent, or 0.3 percent, to close at $1.466 a pound, gaining for a third straight week.

To contact the reporter on this story: Jennifer A. Johnson in Chicago at Jjohnson133@bloomberg.net

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