Concern for declining production of cotton in China prompted cotton futures to scale to a record for a fifth-straight day, Bloomberg reports.
As the world's largest consumer of cotton, China might have to compensate by expanding imports while depleting inventories throughout the world because of natural disasters striking various cotton-producing provinces in the country. When the year ended on August 31, output was 15 percent lower, according to an industry group.
"It looks like China is going to keep buying," Sid Love, president of Joe Kropf & Sid Love Consulting Services LLC in Kansas, told Bloomberg. "There is an absence of sellers."
Cotton for December delivery soared to the exchange limit of 4 cents and hit the record price of $1.4623 per pound Monday morning on ICE Futures in New York. Just last week, cotton rose by 14 percent, the commodity's highest increase since November 2008.
"It's not just a story about supply and demand, but investment demand as well," Ker Chung Yang, an analyst at Phillip Futures Pte. in Singapore, told Bloomberg.
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