Cotton Surges in New York as U.S. Inventory Shrinks; Orange Juice Gains

Cotton rose to a two-month high on concern that supplies in the U.S., the world’s largest exporter, will be tight until the autumn harvest. Orange-juice futures also gained.

Cotton inventories monitored by ICE Futures U.S. have plummeted 96 percent since June 2 to 39,563 bales on Aug. 4, the lowest level on record. Crop estimates are now starting to be scaled back as unusually hot weather scorches the cotton belt, said Mike Stevens, an independent trader in Mandeville, Louisiana.

Low stockpiles and “heat stress that is really being noted in Georgia, Virginia and North Carolina” are supporting cotton gains, Stevens said in an email. “There are plenty of bulls out there.”

Cotton futures for December delivery rose 0.59 cent, or 0.7 percent, to close at 80.06 cents a pound at 2:30 p.m. on ICE in New York. Earlier, the price touched 81.78 cents, the highest level for a most-active contract since May 27.

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

Cotton prices are also up because speculators and investors are buying many agricultural commodities as grain prices soar, Stevens said. “We’ve had strong influences from outside markets,” he said.

Wheat rose to a 23-month high in Chicago as Russia, the world’s third-biggest grower, banned exports because of the country’s worst drought in at least a half-century.

In another ICE market, orange-juice futures for September delivery gained 1.15 cents, or 0.8 percent, to close at $1.4595 a pound at 2 p.m. in New York, the second advance this week.

-- With assistance from Luzi Ann Javier in Singapore and Maria Kolesnikova in Moscow. Editors: Michael Arndt, Steve Stroth.

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

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