Cotton snapped the longest slide in a year on signs that demand will climb in China, the world’s biggest consumer.
In the week ended May 23, U.S. export sales of upland cotton increased 16 percent from a week earlier with purchases led by China, Department of Agriculture data show. Futures fell in the previous nine sessions, touching a four-month low on May 31, amid concern that slowing U.S. expansion would trim demand.
Prices have climbed 9.6 percent this year, the biggest gain after natural gas among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. In the season starting Aug. 1, global production will drop 2.6 percent while demand climbs 2.1 percent, the U.S. Department of Agriculture estimates. Dry weather is hampering crops in Texas, the biggest growing state.
“China remains the big story, and they are still buying everywhere, especially after the technical breach we had in the past two weeks,” Peter Egli, a Chicago-based risk manager for Plexus Cotton Ltd., said in a telephone interview. “I see no signs of China letting up.”
Cotton for July delivery rose 3 cents, the most allowed by the exchange, to settle at 82.36 cents a pound at 2:30 p.m. on ICE Futures U.S. in New York. That’s the biggest gain for a most-active contract since October.
Drier-than-normal conditions prevailed last month in west Texas, while rain will delay plantings in the next six to 10 days in Mississippi and Tennessee, according to Commodity Weather Group, in Bethesda, Maryland. As of May 26, 59 percent of intended cotton acres were planted compared with 76 percent a year earlier, the government said last week.
With the unfavorable weather still affecting U.S. crops, “it’s already too late for much of the acreage,” O.A. Cleveland, an agricultural economics professor at Mississippi State University in Starkville, said in an e-mail.
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