Cotton reached record highs on Tuesday though U.S. stocks fell for the second straight day, Bloomberg reports.
The soft commodity assisted with spearheading other commodities' gains by increasing the 0.5 cent exchange limit to a high of $1.4711 per pound in New York. Cotton futures helped push up the broader commodity index by rising 5 cents, the exchange-imposed limit, to a record high of $1.4711 per bushel. The U.S. Agriculture Department had decreased estimates for inventories and production of cotton in the U.S.
"People don't feel like they're losing out by holding commodities," said David Goerz, who oversees $17 billion at Highmark Capital Management Inc. in San Francisco. "If you’ve lost confidence that stocks can deliver returns, then commodities make sense on a long-term basis."
Chinese demand for cotton has played a significant role in the commodity's value given the country's cotton producing provinces have endured inclement weather that has severely reduced its capacities of cotton production. Consequently, China – the world's largest cotton consumer – has been forced to import it, thus depleting inventories.
After the People's Bank of China increased a reference rate for trading the currency, the Chinese yuan appreciated 0.6 percent.
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