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Cotton Jumps Most in Four Months on Low U.S. Output; Sugar Gains

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Feb. 27 (Bloomberg) -- Cotton futures surged the most in four months on renewed concern that planting will plunge in the U.S., the world’s biggest exporter. Sugar and cocoa also advanced, while coffee and orange juice declined.

Farmers in Texas, the top cotton-growing state, may sow 25 percent fewer acres in 2013 as they switch to more profitable crops, Gaylon Morgan, a specialist at Texas A&M AgriLife Extension Service in College Station, said yesterday in a report. U.S. cotton planting will drop 19 percent, while soybean acreage may increase 0.4 percent to a record, the government said Feb. 22. Cotton futures have rallied 31 percent since reaching a 31-month low on June 4.

“I believe that cotton prices still have room to run higher because soybeans seem to be winning the acreage battle for now,” Michael Smith, the president at Port St. Lucie, Florida-based T&K Futures & Options Inc., said in an e-mail.

Cotton for delivery in May climbed 3.1 percent to settle at 84.38 cents a pound at 2:30 p.m. on ICE Futures U.S. in New York, the biggest one-day gain since Oct. 17. Prices are up 1.7 percent in February, heading for a fourth straight monthly gain.

In the week ended Feb. 12, money managers and larger speculators raised their net-long position, or bets on a price rally, to the most bullish since October 2010. In the year ending July 31, China, the world’s biggest importer and user of the fiber, will hold 52 percent of the world’s stockpiles, U.S. Department of Agriculture data show.

Improving Outlook

“The improving outlook for global growth both this year and next, relatively tighter global balances for the new crop, and better speculative net-buying interest should keep ICE cotton prices” between 80 cents and 90 cents in 2013, Aakash Doshi, a Citigroup Inc. analyst, wrote in a report dated Feb. 26. Prices are unlikely to reach $1 because China has huge reserves, he said.

Also in New York, raw-sugar futures for May delivery advanced 0.2 percent to 18.08 cents a pound, and cocoa futures for delivery in May rose 0.3 percent to $2,131 a metric ton.

Arabica-coffee futures for May delivery fell less than 0.1 percent to $1.4345 a pound on ICE. Orange-juice futures for May delivery slid 1.3 percent to $1.2565 a pound.

To contact the reporters on this story: Marvin G. Perez in New York at mperez71@bloomberg.net; Oliver Renick in Chicago at orenick1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net