Nov. 26 (Bloomberg) -- Cotton futures tumbled in New York, capping the biggest weekly drop since February 2009, as China broadened efforts to curb speculative trading in farm products and cool inflation.
China, the world’s fastest-growing major economy and biggest cotton user, has pledged to control prices and may raise interest rates again to limit inflation. Guotai Junan Securities Co. predicted as many as three increases in borrowing costs by June 30. Cotton prices have dropped 26 percent from a record on Nov. 10.
“The government has definitely taken on a tough-love approach to get inflation under control,” said Sharon Johnson, a senior analyst at Penson Futures in Atlanta.
Cotton for March delivery dropped 4.83 cents, or 4.1 percent, to settle at $1.1176 a pound at 1:09 p.m. on ICE Futures U.S. in New York. Earlier, the price fell by the exchange limit of 5 cents. This week, the fiber dropped 9.2 percent, the most since February 2009.
The all-time high on Nov. 10 was $1.5195. Futures have gained 48 percent this year.
The U.S. exported 266,010 bales of upland cotton in the week ended Nov. 18, down 46 percent from the previous week, the Department of Agriculture said today. A bale weighs about 480 pounds, or 218 kilograms.
“The short-term trend is still pointing lower,” Peter Egli, the director of risk management in Chicago for Plexus Cotton Ltd., a U.K.-based merchant, said in a report.
In China, cotton for September delivery fell as much as the 5 percent daily limit to 24,320 yuan a metric ton on the Zhengzhou Commodity Exchange.
‘Clamp Down Strictly’
The National Development and Reform Commission in China, the top economic planning agency, said yesterday that commodity prices declined in response to the government’s moves to “clamp down strictly on market manipulation and other illegal activity, and curb excessive speculation.”
China’s cotton output may fall 5.5 percent this year to 6.36 million metric tons after rain and cold weather damaged crops, according to Cncotton.com, a research company.
Demand in China is forecast to outpace supplies by 17 million bales in the year ending July 31, the USDA said on Nov. 9. Stockpiles in the U.S. are predicted to fall to 2.2 million bales this season, down 25 percent from 2.95 million last year.