Cotton Has Biggest January Gain Since 1960 Amid Rising Demand
Cotton had its best start to a year since at least 1960, as growers struggled to meet surging demand from China, the world’s biggest consumer.
Prices have more than doubled in the past 12 months as rising growth lifted demand from Chinese textile mills, sending the nation’s imports in 2010 to the highest level in four years. Stockpiles monitored by ICE Futures U.S. have tumbled 87 percent since June 1. Flooding in Australia and Pakistan damaged crops.
“We’ve had a continued level of demand, especially from China,” said Sudakshina Unnikrishnan, an analyst at Barclays Capital in London. “Cotton supply is very tight. The bulk of the U.S. crop has already been snapped up for exports.”
Cotton futures for March delivery rose 3.69 cents, or 2.2 percent, to settle at $1.6844 a pound at 3:02 p.m. on ICE in New York. The fiber climbed 16 percent this month, the biggest January gain since Bloomberg data begins in mid-1959.
The commodity’s advance this month is the largest among the 19 raw materials included in the Thomson Reuters/Jefferies CRB Index. The price touched a record $1.7283 on Jan. 27.
China’s imports totaled 2.84 million metric tons last year, the most since 2006, according to customs figures. Farmers in the country are hoarding 1.94 million tons after prices jumped, the Wall Street Journal reported on Jan. 28, citing the state-funded China National Cotton Information Center.
Lunar New Year
Futures may continue to rise as consumers in China ramp up demand after the Lunar New Year holiday that starts Feb. 2, said Gary Raines, an economist at FCStone Fibers & Textiles.
“The market is gearing up for the rise in demand once China returns after the lunar holiday,” Raines said by telephone from Nashville, Tennessee. “The weaker dollar is also helping the market.”
The U.S. Dollar Index, a gauge against six counterparts, declined as much as 0.8 percent.
Hedge funds and other money managers increased their net- long positions, or bets prices would rise, by 8.7 percent last week, according to data from the U.S. Commodity Futures Trading Commission. That was the biggest weekly gain since August.
To contact the reporters on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net.
To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net.
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