Cotton Climbs, Ending Three-Day Slide, as China Demand May Rise
Source: bloomberg Date: 2009-07-13
July 9 (Bloomberg) -- Cotton rose for the first time this week on speculation that demand will increase in China, the world‘s largest user.
Car sales in the Asian nation jumped 48 percent last month, the biggest gain since February 2006, as a government stimulus plan provided buyers with 10 percent rebates. Cotton output in China this year may drop the most in a decade, analysts have forecast. Urban-consumer spending on clothes jumped 26 percent in the first quarter from a year earlier, government data show.
I‘m constructive on prices moving into the fall because of supply tightness,said Andy Ryan, an FCStone Group Inc. risk-management consultant in Nashville, Tennessee. The Chinese government is likely to issue import quotas before the end of July.
Cotton futures for December delivery rose 2.02 cents, or 3.4 percent, to 61.13 cents a pound on ICE Futures U.S. in New York. The most-active contract fell 3 percent in the previous three days.
Cotton has rallied 25 percent this year as declines in global production outpaced slowing demand.
China will have to boost imports so that textile mills can have contamination-free cotton, Ryan said. Some yarn contracts specify that producers must use supplies from other countries, including the U.S., he said.
The U.S. is the largest cotton exporter and China is its biggest market. In June, U.S. cotton was among the cheapest supplies in the world. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, averaged 4.7 percent less in June than in the previous five months.
