Cotton Futures Soar to Record on `Worldwide Scramble' for Limited Supplies
Cotton futures surged to a record on signs that global demand from textile mills will continue to outpace supplies.
Output in China, the world’s biggest consumer, fell 6.3 percent last year, the National Bureau of Statistics said this week. U.S. sales surged 56 percent to 403,341 bales in the week ended Feb. 24 from a week earlier, the U.S. Department of Agriculture said yesterday. Prices have more than doubled in the past year.
“It’s a worldwide scramble,” said John Flanagan, the president of Flanagan Trading Corp. in Fuquay-Varina, North Carolina. “The last holdouts realized there was no way out other than just buying, trying to find cotton to keep their mills running.”
Cotton for May delivery jumped by the exchange limit of 7 cents, or 3.4 percent, to settle at an all-time high of $2.127 a pound at 2:47 p.m. on ICE Futures U.S. in New York. The price rose for the sixth straight session, the longest rally since Nov. 5.
“Export commitments out of the U.S. continue at record pace, and due to the razor-thin expected ending stocks, demand must be rationed as there is not enough cotton,” Rabobank International said in a report yesterday.
U.S. inventories monitored by ICE have tumbled 68 percent in the past 12 months.
“While the U.S. cotton planting season is still a month away, the current dry conditions in the South and strong La Nina suggest that soil moisture deficiencies could be an issue,” Rabobank said.
This week, futures gained 15 percent, the most since early December. The price closed higher by the exchange limit four times in the past six sessions.
A bale weighs 480 pounds, or 218 kilograms.
To contact the reporters on this story: Chris Prentice in New York at cprentice3@bloomberg.net; Jae Hur in Tokyo at jhur1@bloomberg.net
To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net
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