Cotton futures jumped, approaching a record, on concern that a hailstorm damaged crops in Texas, the biggest U.S. grower.
Severe storms yesterday swept through the heart of the cotton belt from near Tokio to Lubbock, Texas, covering the ground with hail as big as golf balls, said Dale Mohler, a senior meteorologist at AccuWeather Inc. in State College, Pennsylvania. Cotton prices surged the most allowed by ICE Futures U.S., bringing this year’s gain to 58 percent.
“There was at least moderate damage to any crops along that path that haven’t been harvested,” Mohler said. “You could have severe losses for individual farmers.”
Cotton for December delivery rose by the exchange limit of 4 cents, or 3.5 percent, to settle at $1.1971 a pound at 2:59 p.m. on ICE in New York.
On Oct. 15, the price surged to $1.198, the highest level since the fiber started trading 140 years ago, as global demand outpaced supplies. This week, the price climbed 9 percent, the third straight gain.
“Cotton’s limit move is seen as an overreaction” to West Texas weather, Sharon Johnson, a senior analyst at First Capital Group LLC in Roswell, Georgia, said today in a report. “But the market is sensitive to any potential loss to supply, here or abroad.”
U.S. stockpiles will drop 8.5 percent in the year that began Aug. 1 from a year earlier, the U.S. government forecast on Oct. 8.
‘Punch in the Gut’
The severe weather will “definitely” cause some quality loss with some production possibly “hailed out,” Mike Stevens, an independent trader in Mandeville, Louisiana, said in an e- mail yesterday. “This is like a punch in the gut, a bad dream for the West Texas producer.”
The counties hit the hardest by the storm were eastern Yoakum, Terry, southeast Hockley and Lubbock, Mohler said. All are “prime cotton areas,” he said. In Lubbock, 1 inch (2.5 centimeters) to 3 inches of rain fell in an hour, he said. The U.S. is the biggest cotton exporter.
“It’s not good to have a lot of hail this time of year,” said Sid Love, the president of Joe Kropf & Sid Love Consulting Services LLC in Overland Park, Kansas. “That has had probably an impact on some of the quality of the cotton, not so much the quantity. We’ll see.”
