Cotton Futures Gain on Signs Chinese Farmers May Balk at Boosting Acreage

Cotton rose for the sixth time in seven sessions on signs that this year’s rally to a record may fail to boost planting in China, the world’s biggest grower. Orange-juice futures fell.

The China Cotton Association said wide price swings and high costs may discourage farmers from increasing acreage. Before today, cotton futures in New York advanced 73 percent this year and prices in China topped $2 a pound as global demand outpaced supplies and inventories plunged in the U.S., the leading exporter.

“If $2 doesn’t cause somebody to want to plant cotton, I don’t know what else will,” said Sid Love, the president of Joe Kropf & Sid Love Consulting Services LLC in Overland Park, Kansas. Plantings may depend on China’s steps to curb inflation, he said.

Cotton for March delivery rose 1.79 cents, or 1.4 percent, to $1.322 a pound at 10:07 a.m. on ICE Futures U.S. in New York. Last week, the most-active contract jumped 18 percent, the most since July 9, 1971. On Nov. 10, the most-active contract reached a record $1.5195.

“Cotton is a labor-intensive crop,” the China Cotton Association said, citing a survey of 1,700 farmers in 12 provinces last month. “That’s why the volatile prices and high input costs such as labor and raw materials have prevented farmers from greatly increasing the acreage.”

‘Short Supply’

Demand in China is forecast to outpace production by 17 million bales in the season that ends July 31, according to the U.S. Department of Agriculture. The deficit reached 18 million bales the year before, the USDA said in a Nov. 9 report. A bale weighs about 480 pounds, or 218 kilograms.

“You have not eliminated the reason we are up here in the first place,” said Tom Reardon, the president of Delta Brokerage in New York. “Cotton is in very short supply.”

Orange-juice futures for January delivery dropped 2.95 cents, or 1.8 percent, to $1.615 a pound in New York. Yesterday, the price jumped to the highest since May 2007 on concern that a cold snap would hurt Florida’s crop.

Before today, orange juice gained 27 percent this year.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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