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Cotton price hits record in past 14 years

10 November 2010 10:38 (UTC +04:00)

The March-delivery contract gained as much as 3.3 percent to $1.5195 a pound on ICE Futures U.S. in New York and traded at $1.4820 at 11:53 a.m. Singapore time. Futures have doubled this year, making them the best performer among 19 commodities on the UBS Bloomberg CMCI Index.
The U.S. Department of Agriculture yesterday lowered its global output estimate to 115.25 million bales, from 116.68 million bales a month earlier, and forecast that stockpiles will decline to 42.2 million bales. That will be the lowest global stockpile in 15 years, according to the agencyâ€™s data. A bale weighs about 480 pounds.
â€œCotton supply only continues to get tighter and demand remains strong,â€ Claudio Oliveira, head of trading at New York- based Castlestone Management LLC., said in an e-mail today. â€œStockpiles worldwide are feeling the pinch.â€
The USDA shaved its estimate on Chinaâ€™s inventory by July 31 to 13.221 million bales, from 14.721 million bales a month earlier, citing â€œshortages which have become apparent over the past several weeks, indicating minimal inventories available for mills to continue operations.â€
â€œThe single most important price driver is a supply shortage in China, which has far exceeded expectations and has resulted in recent prices paid to producers of an unprecedented $2 a pound,â€ the USDA said in its report yesterday.
Cotton futures in Zhengzhou advanced to a record for a fourth straight day, more doubling the price this year, and boosting costs for textile makers.
The contract for May delivery rallied as much as 2.2 percent to 33,720 yuan ($5,079) a ton on the Zhengzhou Commodity Exchange, before trading at 33,385 yuan at 10:15 a.m. local time.