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.
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.
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 trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
