Cotton fell from an all-time high, halting the longest rally in more than a year, on speculation that rising production will help ease a supply shortage.
Global output will jump 11 percent to a record 27.6 million metric tons in the year starting Aug. 1 after prices surged, the International Cotton Advisory Committee said on March 1. China, the world’s largest producer and consumer, aims to boost its crop by 14 percent, according to a government report last week.
Cotton for May delivery dropped by the exchange limit of 7 cents, or 3.3 percent, to settle at $2.0714 a pound at 2:54 p.m. on ICE Futures U.S. in New York. Before today, the price rose for seven straight days, jumping 21 percent in the longest string of gains since September 2009. The commodity reached a record $2.197 yesterday.
The fiber has more than doubled in the past year as surging demand outstripped global supplies.
Cotton’s 14-day relative-strength index was above 70 on March 4 and March 7, a signal to some investors that prices were poised to fall.
“It’s a correction as the price went up too much and too fast,” said Toshimitsu Kawanabe, an analyst at commodity broker Central Shoji Co. “There’s little change in fundamentals; supply is scarce this season.”
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