Cotton futures rose to a four-week high on mounting concern that the government will lower its estimate of the U.S. harvest, signaling tighter global supply.
Farmers probably collected 18.16 million bales in the year that ends on July 31, less than the 18.32 million estimated by the U.S. Department of Agriculture on March 10, according to a survey by Bloomberg News. The USDA will update its forecast tomorrow. Cotton prices have more than doubled in the past year, touching a record in March, as demand increased in China and output dropped in the U.S., the world’s largest exporter.
“Expectations of lower U.S. output coupled with fear of dry weather across the Texas region is pushing prices higher,” said Mike Stevens, an independent trader in Mandeville, Louisiana.
Cotton for May delivery rose 0.16 cent, or 0.1 percent, to settle at $2.0822 a pound at 3:05 p.m. on ICE Futures U.S. in New York. Earlier, the contract gained by the 7-cent exchange limit to $2.1506, the highest since March 8. The fiber reached a record $2.197 on March 7.
Texas is the biggest cotton producing state in U.S.