Cotton prices may fall as much as 11 percent by November as supplies from the harvest in the U.S., the world’s biggest exporter, outpace global demand, according to Plexus Cotton Ltd.
“We have pretty good weather right now and the crop is making progress, but as stocks pile up, there are not enough buyers to take them,” Peter Egli, a Chicago-based director of risk management at the cotton merchant, said today in a telephone interview.
The price may touch 65 cents to 70 cents a pound, he said. Through yesterday, cotton futures slumped 29 percent in the past 12 months as worldwide inventories expanded.
The U.S. crop may increase by 1.5 million bales from a year earlier, and “a large part of the U.S. and other Northern Hemisphere crops remains unsold,” Liverpool, U.K.-based Plexus said today in a report. A bale weighs 480 pounds, or 218 kilograms.
Import demand by China, the biggest consumer, may decline because of ample domestic supplies. “What are the owners of new-crop cotton going to do when Chinese buyers remain in hiding,” Plexus said in the report.
Cotton for December delivery fell 2.4 percent to 73.39 cents at 1:05 p.m. on ICE Futures U.S. in New York, heading for the biggest drop for a most-active contract since Aug. 10.
Yesterday, Cotlook Ltd., the publisher of a benchmark price index, boosted its estimate for the global surplus by 8 percent to 3.296 million metric tons from a month earlier, citing lower Chinese demand.
To contact the reporter on this story: Patricia Laya in New York at email@example.com
To contact the editor responsible for this story: Steve Stroth at firstname.lastname@example.org