Cotton prices fall on speculation China may curb fiber imports
Source: www.tehrantimes.com Date: 2009-06-23
NEW YORK (Bloomberg) -- Cotton fell, capping the biggest weekly decline in more than four months, on speculation that China, the world‘s largest fiber user, will curb purchases from the U.S., the top exporter.
Last month, China, the leading buyer of U.S. cotton, said it would sell 1.52 million metric tons (about 7 million bales), of government stockpiles in a bid to ease tight domestic supplies. That’s 65 percent of the 10.8 million bales in total U.S. exports projected by the Department of Agriculture for the 12 months that start Aug. 1.
China‘s cotton reserves are at a record, Jeffery Lu, an analyst with Noble Group Ltd.’s cotton unit, said yesterday in a telephone interview from Shanghai. Without new import quotas, textile mills can‘t import much, even though foreign cotton is less expensive than domestic fiber.
Cotton futures for December delivery fell 2.76 cents, or 4.7 percent, to 56.38 cents a pound on ICE Futures U.S. in New York. The most-active contract was down 7.9 percent for the week, the biggest such decline since Feb. 13.
China, the world’s biggest cotton producer, has sold about 296,000 tons, or 19 percent of the amount it plans to auction since the sales began on May 22, according to reports by industry watcher Cottonchina.org. Sales yesterday averaged about 86.4 cents a pound, the group said.
Global outlook
Global cotton production will drop to 23.189 million tons in the new season, Cotlook Ltd. said Friday. Last week, the USDA estimated world output at about 26.2 million tons in the previous year. Cotlook‘s projection rose 59,000 tons from last month’s forecast because of a larger crop in Pakistan, the fourth-biggest cotton grower.
Rain today and tomorrow in West Texas, the biggest-producing region in the U.S., may help the development of cotton crops that have endured dry conditions in the past few months, said Drew Lerner, the president of World Weather Inc.
Cotton has climbed 15 percent this year as declines in global production outpaced slowing demand.
India is the second-biggest cotton grower, followed by the U.S. A bale weighs about 480 pounds, or 218 kilograms.
