BLBG: Cotton Jumps by Limit in New York; China Price at Record on Supply Outlook
Cotton surged by the daily maximum to trade near a record in New York on concern that global supplies may be curbed by weather damage to crops in China and the U.S. Futures jumped to an all-time high in China.
Cotton for December delivery advanced by the daily limit of 4 cents to $1.2926 a pound on ICE Futures U.S. and traded at that level at 1:40 p.m. Tokyo time. The contract reached $1.305 on Oct. 26, the highest level since the fiber started trading 140 years ago.
“Adverse weather in China and the U.S. has spurred a buying spree,” Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co., said today. “Cotton is one of the most-favored commodities among speculative funds.”
Cotton rose 23 percent in October, the biggest monthly gain since June 2007. The price has jumped 71 percent this year as global supplies trail demand, making it the best-performing commodity on the Thomson Reuters/Jefferies CRB Index.
China’s harvest will drop to 6.4 million tons in the year that began Aug. 1, 7.9 percent lower than a year earlier, said Cotlook Ltd., a research firm based in Birkenhead, England. That forecast was made before the China Meteorological Center said Oct. 25 that a cold front moving across the nation might hamper harvesting and reduce fiber quality.
Before the cold spell, China’s output was forecast to be 4.03 million tons lower than estimated consumption, according to the U.S. Department of Agriculture. Purchases by the world’s most-populous nation could further drain global stockpiles projected by the USDA to drop to a 14-year low in the coming year.
Crops in the U.S., the largest shipper, were damaged by a hailstorm in Texas.
Cotton for May delivery on the Zhenzhou Commodity Exchange jumped by the daily 5 percent limit to a record 28,585 yuan ($4,282) a ton before trading at 28,580 yuan at the 11:30 a.m. local-time break.
To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
