Demand continues to exceed supply in global cotton markets, driving commodity futures brokers and traders to bid up the price of cotton futures contracts. Much is resting on the actions of India's Commerce Ministry, which may limit exports of the fiber to just 5.5 million bales in the year that begins next month.
On the IntercontinentalExchange, No. 2 cotton futures for December delivery surged 2.878 percent to $1.0005 per pound – the second time this week that cotton has crossed the $1.00-per-pound line.
March 2011 contracts also gained, rising 2.35 percent to 98.7 cents per pound.
"It's been a question of very tight supply and very high demand at this time," Tom Reardon, the president of New York's Delta Brokerage, told Bloomberg News.
Cotton has risen almost 50 percent since late July, as consumption grows without an equivalent rise in supply. In addition, Pakistan may have to buy millions of bales to supply its domestic garment industry, as much of the crop was ruined by the devastating flooding in its Punjab and Sindh provinces.
It's fear of running out of domestic cotton supplies for its own industry that has India pondering an export quota. Some Indian officials, however, say the farmers deserve to get top dollar on the international markets.
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