Cotton Halts Slide on China Demand Outlook
Source: bloomberg Date: 2010-11-17
Cotton futures halted their biggest three-day decline in almost two years on speculation that China may boost imports. Orange juice also gained.
China, the biggest user of the fiber, may buy 20 million bales this year to meet rising demand from domestic textile mills, Olam International Ltd. said today. The amount would be a record. Cotton prices have climbed 78 percent this year on concern that shrinking global supplies won't meet demand in the Asian nation.
We've still got the same bullish fundamentals that we've had for months, said Mike Stevens, an independent trader in Mandeville, Louisiana.
Cotton futures for March delivery advanced 0.2 cent to settle at $1.342 a pound at 2:44 p.m. on ICE Futures U.S. in New York. The commodity had dropped 8.8 percent in the previous three sessions, the biggest such slide since December 2008. Earlier, the fiber fell as much as 4.3 percent, to $1.2838, the lowest level since Nov. 1.
The commodity reached $1.5195 on Nov. 10, the highest price since trading began 140 years ago. Adverse weather damaged crops in China, Pakistan and the U.S. earlier this year.
Market Stabilizing
The market appears to be stabilizing now, Stevens said. We've had a very healthy correction.
The U.S. Department of Agriculture on Nov. 9 forecast China may import 15 million bales in the season ending July 31, up 38 percent from 10.9 million last year.
U.S. export sales of upland cotton totaled 432,236 bales for the week ended Nov. 4, down 19 percent from the previous six-week average and five times the level from the same week last year, the USDA said on Nov. 12.
Export demand is good, said Sid Love, the president of Joe Kropf and Sid Love Consulting Services LLC in Overland Park, Kansas.
Export controls by India, the second-largest exporter, have raised concerns about its reliability as a supplier, resulting in many importers turning to the United States, the USDA's Foreign Agricultural Service said in a report on Nov. 9.
The U.S. is the largest seller of the fiber and third- biggest grower, behind China and India.
Stockpiles held in warehouses monitored by ICE rose 97 percent last week to 37,086 bales. Inventories fell as low as 8,910 bales on Oct. 8. As of Nov. 14, 78 percent of the U.S. crop was harvested, according to the USDA.
Orange-juice futures for January delivery gained 1.5 cents, or 1 percent, to settle at $1.575 a pound at 2 p.m. on ICE.
