Cotton futures fell for the first time in six sessions on speculation that demand will drop and plantings will increase in the U.S. after prices surged 88 percent this year.
Acreage may expand at least 10 percent in the Southwest, according to John Robinson, a professor and extension economist at Texas A&M University in College Station. Texas is the largest cotton-producing state, and the U.S. is the world’s leading exporter. Yesterday, the fiber traded 6 cents below the record $1.5195 a pound.
“Current higher prices may slow purchases by overseas importers and encourage U.S. farmers to increase crop acreage,” said Hiroyuki Kikukawa, the general manager of research at IDO Securities Co. in Tokyo.
Cotton for March delivery fell 2.35 cents, or 1.6 percent, to settle at $1.4214 at 2:46 p.m. on ICE Futures U.S. in New York, the biggest drop since Nov. 26. The price jumped 11 percent in the previous five sessions.
Today’s decline may be just “a little correction,” said Keith Brown, the president of Keith Brown & Co., a brokerage in Moultrie, Georgia. “The trend is still up. Until we either see a collapse of demand or a huge infusion of new supply, we’re going to stay volatile and bullishly slanted.”
Prices headed for the biggest annual gain since 1973 as growers struggled to meet mounting demand from China, the world’s biggest consumer. The fiber rose to the record on Nov. 10.