NEW YORK (Dow Jones)--Cotton prices rose Friday as China, the world's top
importer, announced it would actively pursue methods to meet rising demand.
Nearby July cotton futures settled up 0.24% or 0.3%, at 84.72 cents a pound.
Cotton prices are up more than 60% from the same time last year as world
economic recovery has sparked a rebound in world textile demand. Most of the
world's available cotton stocks have been bought and used and now mills are
awaiting the fall harvest in the Northern Hemisphere for more supplies. World
cotton production is expected to fall 13% short of supply in the current season
and still 4.5% below demand in the following year, according to the U.S.
Department of Agriculture.
The China Cotton Association said Friday that the country would release
600,000 tons of cotton from state reserves and would add to its import quota.
Analysts had expected the move, estimating China would allow another one
million tons to be imported. China is the world's top textile producer. The
U.S. is the leading exporter.
Despite fervent demand, the country has a slim chance of gathering that
cotton in short order.
"There's nothing [for China] to import," said Peter Egli, director of risk
management at Plexus Cotton Ltd. in Chicago.
Strong demand from China will keep cotton prices supported well into the
future as the country will need to rebuild its stock levels, Egli said.
Cotton prices are stuck in a tight range of 78 cents-80 cents. Mills are
eager to buy at lows, and producers are happy to sell hedges for their upcoming
crop at the top of that range.
ICE daily cotton stocks decreased by 25,250 500-pound bales Thursday to total
465,434 with 25,084 decertification orders, according to exchange data.
ICE cotton open interest--the number of active positions left at the end of
the session--increased by 549 positions Thursday to total 163,898, according to
the exchange.
Volume was estimated 5,823 lots. In options, approximately 482 calls and 544
puts traded on the floor, according to exchange data.
Close Change Range
Jly 84.72 +0.24 83.50-84.85
Oct 80.21 +0.20 80.05-80.51
Dec 78.91 +0.19 78.34-79.20