Cotton futures jumped the most in nine months after India, the world’s second-biggest exporter, banned more shipments to ensure domestic supplies.
Almost 9.4 million bales of 170 kilograms (375 pounds) have been shipped, India said in a statement. A surplus for export in the year that started Oct. 1 was estimated at 8.4 million. Prices in New York tumbled 57 percent in the past year as global supplies outpaced demand, and wide price swings hurt profit at Glencore International Plc and Noble Group Ltd.
India’s move “caught the market off guard,” Sterling Smith, a market analyst with Country Hedging in St. Paul, Minnesota, said in a telephone interview. “The world will require more cotton from the U.S.,” the top exporter, he said.
Cotton for May delivery climbed by the exchange limit of 4 cents, or 4.5 percent, to settle at 92.23 cents a pound at 2:39 p.m. on ICE Futures U.S. in New York, the biggest gain since May 31.
The ban may send prices as high as 98 cents in the next few days, Smith said.
India is “a game changer,” Sharon Johnson, a senior analyst at Penson Futures in Atlanta, said in an e-mail.
The fiber has plunged from a record $2.197 on March 7 as demand waned in China, the biggest consumer. On Feb. 9, the USDA boosted its forecast for global stockpiles by 4.1 percent on production gains and slowing usage. The agency will update its forecast on March 9.
India’s ban “is not really about a shortage of cotton, it’s just to protect the local industry,” Keith Brown, the president of Keith Brown & Co., a commodity broker in Moultrie, Georgia, said in a telephone interview. “We still have ample supply.”
Glencore, based in Baar, Switzerland, said today that its agricultural-trading unit had a loss of $8 million in the second half of 2011 following an “unprecedented cotton market,” compared with profit of $659 million a year earlier.
The ICE limit will increase to 5 cents tomorrow.