Cotton futures for December delivery briefly hit a nominal high above 119 cents per pound today, before slipping to 115.02 cents per pound, just above Thursday's settling price of 114.87 cents per pound on the IntercontinentalExchange.
That's the highest-ever price in nominal terms, though cotton actually went over 400 cents per pound in real, inflation-adjusted terms in 1973.
Sources report that the big surge in demand is coming from China, where cotton futures have gone to over 160 cents per pound as imports rise. "The Chinese have been running down their own domestic stocks," Wayne Gordon, an analyst at Rabobank Groep NV, told Bloomberg News in a phone interview. "They're going to have to buy at the global market to replenish that."
Another factor affecting the markets is the continued problem of Pakistan's demand for cotton – it needs the fiber to keep its domestic garment industry, a pillar of its economy, running smoothly.
But with the nation's fields ruined by torrential rainfall, Pakistanis must turn to imports from the global markets.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
