Cotton prices extended a rally to a record on mounting demand from China, the world’s biggest user.

“The Chinese market is just on fire,” said Peter Egli, the director of risk management in Chicago for Plexus Cotton Ltd., a U.K.-based merchant. “We have seen a lot of the mills back off, but China is still paying.”

On ICE Futures U.S. in New York, cotton for December delivery jumped by the exchange limit of 5 cents, or 3.9 percent, to settle at $1.3426 a pound at 3:20 p.m. That marked the highest price in 140 years of trading. The commodity has soared 78 percent this year.

The China Cotton Association said the nation will boost management of the industry after prices surged on adverse weather and speculation. Major companies were urged to stabilize the market, the group said in a statement on its website, citing the National Development and Reform Commission.

Futures for March, May and July delivery also advanced by the exchange’s maximum today in New York. The trading limit will rise to 6 cents tomorrow, ICE said.

Last week, a cold spell in China and hailstorms in Texas damaged crops. Before the bad weather, China’s harvest was expected to be 18.5 million bales less than domestic use this season, U.S. Department of Agriculture data show.

An area of thunderstorms near the Indonesian island of Sumatra may develop into a tropical cyclone this weekend and damage cotton crops in India, weather forecaster MDA Information Systems Inc. said today.

‘Panic’

“Worries over just how short China’s crop is with ongoing weather issues has their mills in a near-constant panic,” Sharon Johnson, a senior analyst at First Capitol Group LLC in Atlanta, said in a report yesterday.

Global demand will rise to 25 million metric tons in the season that ends July 31, up 1.6 percent from last year, the International Cotton Advisory Committee said yesterday.

The USDA estimated last month that world use will exceed supply by 4.09 million bales this year. The agency will update its crop forecast on Nov. 9. The U.S. is the biggest exporter.

Yesterday, cotton inventories monitored by ICE rose 1,260 bales, or 10 percent, to 13,546 bales. They have plunged from this year’s high of 1.08 million on June 2.

A bale weighs 480 pounds, or 218 kilograms.