Cotton tumbled the most allowed by ICE Futures U.S. for the second straight day on signs that India, the world’s second-largest grower, is resuming exports that were limited by the government to ensure domestic supplies.
India said Dec. 21 it would allow exports of 2.5 million bales after sellers and merchants failed to secure supplies during an earlier shipment authorization of 5.5. million bales. An Indian bale weighs 375 pounds, or 170 kilograms. Prices have almost doubled this year, heading for the biggest annual advance since 1973.
“India saying that it will allow export of the remaining amount of the quota ensures an increase in supply,” said Keith Brown, the president of Keith Brown & Co., a brokerage in Moultrie, Georgia. Prices also are under pressure “after rising too quick, too soon,” he said.
Cotton for March delivery slumped the exchange limit of 6 cents, or 3.9 percent, to settle at $1.4812 a pound at 2:30 p.m. on ICE Futures U.S. in New York. Yesterday, the price declined by the maximum of 5 cents. The most-active contract reached a record $1.5912 on Dec. 21.
“At this high level, we expect demand to start to be rationed somewhat,” said Wayne Gordon, a senior analyst at Rabobank Groep NV in Sydney.
Sales before the Christmas and New Year’s holidays pushed prices lower, said Jongyoun Chung, a broker at Samsung Futures Inc. in Seoul.
‘Absolutely Fantastic’
Export sales of upland cotton by the U.S., the world’s biggest shipper, jumped 51 percent in the week ended Dec. 16 from a week earlier, government data showed.
“These numbers are absolutely fantastic,” Mike Stevens, an independent trader in Mandeville, Louisiana.
Pakistan may import 4 million bales to ease shortages and cool prices after the worst-ever floods damaged crops, said Nazar Muhammad Gondal, the farm minister. Output may total 11 million bales, less than the 15 million bales required, he said.
Cotton imports by China were 126,125 metric tons last month, government data showed. That compared with 154,547 tons a year earlier and 96,096 tons in October.
