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Cotton Reaches Highest Since 2014 on Demand for U.S. Exports
2017-02-13 17:57:47.409 GMT
By Marvin G. Perez
(Bloomberg) -- Cotton futures jumped to the highest in more
than two years on bets that robust demand will continue for
supplies from the U.S., the world’s biggest exporter.
American shippers have already committed to sell 86 percent
of this season’s total expected exports, up from 72 percent a
year earlier, government data showed last week. Purchases were
led by Vietnam and China, the world’s top consumer.
Prices have climbed for four straight weeks amid the pickup
in global demand. U.S. farmers are reaping the benefits after
supply disruptions in growers including India, the No. 1
producer. The U.S. National Cotton Council on Feb. 11 said world
consumption may top production for a third straight year in the
season that starts Aug. 1, further trimming global stockpiles.
Hedge funds are holding the biggest wager on record that cotton
futures will keep rallying.
“A lack of exportable supplies in Central Asia and West
Africa, coupled with India’s reduced exports, are supporting
current prices,” the Cordova, Tennessee,-based council said in a
presentation on its website.
Cotton for May delivery rose 1.3 percent to 78.08 cents a
pound at 12:56 p.m. on ICE Futures U.S. in New York after
touching 78.33 cents, the highest since June 2014. Aggregate
trading volume was more than double the 100-day average for this
time, according to data compiled by Bloomberg. The fiber has
advanced about 10 percent in 2017 after climbing the past two
years.
Supplies have dropped from India after Prime Minister
Narendra Modi’s surprise move last year to withdraw and replace
high-denomination banknotes. The move dented farmer confidence
as they largely sell their harvest for cash.
In India, “export sales are reportedly being canceled due
to rising prices and tightness of supply that is lingering,”
Louis W. Rose, an industry consultant in Memphis, Tennessee,
said in a report Monday.
In the week ended Feb. 7, money managers boosted the net-
long position, or the difference between bets on a price
increase and wagers on a decline, by 7.3 percent to 100,340
futures and options, U.S. Commodity Futures Trading Commission
data show. That’s the highest since records begin in 2006.
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