A burst of cold weather in China has thrown expectations about that nation's supply of cotton into doubt, at a time when concerns were already running high. Before the cold weather, reports Bloomberg News, Chinese cotton output was expected to fall about 18.5 million bales short of total domestic consumption for this season.
Thanks to the weather in Xinjiang province, there could be a further 3-million-bale shortfall.
Combined with rising demand for raw materials to fuel the ferocious pace of growth in the world's largest nation, the stage is being set for further surges in commodity futures.
On the IntercontinentalExchange, March 2011 cotton futures jumped 4 cents – the maximum price movement allowed by the exchange's trading rules – to 124.45 cents per pound.
Cotton futures for December delivery on the New York Mercantile exchange rose 4.24 cents to 129.5 cents per pound.
Figures from Cotlook Limited, a British research firm, show that the Chinese cotton harvest may drop 7.9 percent to 6.4 million tons for the year that began August 1. That forecast was made before the Xinjiang cold snap.
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