Nov. 4 (Bloomberg) -- Cotton soared to a record $1.4052 a pound in New York on concern that global demand led by China will outstrip production and erode inventories.
Prices have rallied 86 percent this year on concern that damage to China’s crop may force domestic mills to import more cotton than estimated, reducing global stockpiles already forecast to drop to a 14-year low. The fiber has been the best- performing commodity on the Thomson Reuters/Jefferies CRB Index over the past 12 months.
“Even at $1.35, demand has not cooled off,” said Rogers Varner, the president of brokerage Varner Bros. in Cleveland, Mississippi. “It’s a bull feast.”
Cotton for December delivery rose 4.93 cents, or 3.6 percent, to settle at $1.4045 a pound at 2:48 p.m. on ICE Futures U.S. Earlier, prices reached $1.4052, the highest level since the fiber began trading 140 years ago. The commodity has more than doubled in the past 12 months.
In China, cotton futures for May delivery reached a record of 29,980 yuan a metric ton yesterday on the Zhengzhou Commodity Exchange.
The U.S., the world’s biggest exporter, shipped 560,798 bales of upland cotton for the week ended Oct. 28, up 20 percent from the average of the previous four weeks, the U.S. Department of Agriculture said today. China, the largest user of the fiber, purchased 59 percent of the exports.
Government Price Control
China’s government is increasing its control on the price of cotton and will pay attention to challenges faced by textile companies, said Wen Zhongliang, the commercial counselor at the Ministry of Commerce’s foreign trade department. Wen attributed rising prices to an expected production deficit this year and speculative buying.
“Small, family-owned mills are forced to close due to raw- cotton prices being too high,” Sharon Johnson, a senior analyst at First Capitol Group LLC in Atlanta, said in a report yesterday. China is “especially hard hit,” she said.
Boraas Waefveri AB said it filed for bankruptcy as the rising cost of cotton and a lack of sales at the Krenholm Valduse division in Estonia prevented the Swedish textile maker from returning to profit.
Surging cotton prices may mean more expensive clothes, sheets and towels as textile mills including India’s Arvind Ltd. and retailers such as Next Plc pass along higher costs to their customers.
Next, a Leicester, England-based clothing retailer, said yesterday it will raise prices as much as 8 percent in the first quarter because of the jump in costs. Ahmedabad, Gujarat-based Arvind, the world’s largest denim maker and a supplier to jeans maker Levi Strauss & Co. and Gap Inc., has raised prices by as much as 15 percent, Citigroup Inc. economists Rohini Malkani and Anushka Shah wrote in an Oct. 11 report.
