As searing summer heat parches Russian wheat fields, high temperatures and meager rain may have a similar effect on the U.S. cotton crop in the southeastern United States.
ICE Number 2 cotton futures for December delivery rose 0.64 percent to 76.80 cents per pound on Thursday.
Both rain and heat played a role, with temperatures soaring 4 degrees Fahrenheit above normal levels and rainfall in the Mississippi Delta 20 percent below the 30-year average.
“The cotton crop in the southeastern U.S. is melting. A few weeks ago, the crop was excellent, but God Almighty has turned off the faucet,” Keith Brown of Keith Brown & Co., a Georgia brokerage, told Bloomberg News.
However, Dale Cougot, the National Cotton Council’s senior economist, cautioned against excessive optimism in a Delta Farm Press interview. Cougot said that if prices remain over 70 cents per pound for a sustained period, it could lead to a rapid increase in supply as more producers try to cash in, which would have the opposite effect – a supply glut, leading to price crash.
Another important impact will be consumer spending and the recovery of retail demand.
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