Cotton approached its record price on Thursday as concerns mounted that China will acquire mass amounts of the global demand and deplete the supply, Bloomberg reports.
Inclement weather also drove up the price as storms in the United States and coldness in China prompted cotton to climb as much as 1.9 percent to $1.3176 per pound on ICE Futures U.S. while gaining for a third-straight day.
"Spinning mills are having difficulty securing enough volume, indicating very tight supply," Han Sung Min, a broker at Korea Exchange Bank Futures Co. in Seoul, told Bloomberg. "Mills in China keep importing following higher domestic prices."
The price of cotton sharply increased 23 percent in October, representing its biggest gain in one month since June 2007. Its price soared 73 percent this year, establishing itself as the commodity with the best performance on an industry index.
With the cold and wet weather last week, Chinese production was projected to be 18.5 million bales short, which would lead to higher imports, according to the U.S. Department of Agriculture.
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.
