Cotton rose to the highest price in almost two months as Tropical Storm Lee may have damaged crops in the U.S. South and a report showed global imports will rebound. Orange juice also climbed.
Tropical Storm Lee brought heavy rains to Louisiana and much of the Gulf Coast, and rain was expected to continue through the middle of the week across states including Georgia and North Carolina, according to the National Weather Service. Global cotton imports will rebound to 8.1 million metric tons in the year that started Aug. 1 as China rebuilds government reserves, the International Cotton Advisory Committee said.
“The initial push was from the news on China, but there’s also a perfect storm brewing here with technical charts and crop damage,” Louis Barbera, a broker at VIP Commodities in New York, said in a telephone interview. “The fact of the matter is that we’re going to have a small crop.”
Cotton for December delivery jumped 4 cents, the maximum allowed by the exchange, to settle at $1.1034 a pound at 2:42 p.m. on ICE Futures U.S. in New York, the highest price since July 11. The 3.8 percent gain was the biggest since Aug. 17.
As of Sept. 4, about 28 percent of U.S. cotton fields were in good or excellent condition, less than half of the rate of a year earlier, government data show. The U.S. Department of Agriculture has forecast 30 percent of domestic output will be lost this year as the worst drought in more than 100 years damages crops in Texas, the biggest grower.
The USDA will update its production forecast on Sept. 12. The U.S. is the world’s biggest cotton exporter. China is the top grower, consumer and importer.
Adding to U.S. supply concerns is the possibility of significant losses in Pakistan’s crop, Mike Stevens, a Mandeville, Louisiana-based independent trader, said in an e-mail. Pakistan is the fourth-largest grower.
Flash floods in Pakistan’s southern Sindh province have destroyed 80 percent of crops in the region, Irshad Bhatti, a spokesman for the country’s National Disaster Management Authority, said by telephone on Sept. 5.
Orange-juice futures for November rose 3 cents, or 1.8 percent, to settle at $1.679 a pound in New York, the sixth straight gain and the highest closing price for the most-active contract since Aug. 9.