China's domestic demand for cotton might prompt the nation to purchase a record amount of 20 million bales of the fabric, Bloomberg reports.
The U.S Department of Agriculture estimated early last week that Chinese imports of cotton would rise to 15 million bales. China purchased nearly 11 million bales by July 31, according to the USDA. For year ending July 2006, China imported 19.3 million bales.
"The priority for the Chinese government is food-crop production is maximized and not so much fiber," according to Olam Chief Executive Officer Sunny Verghese, who interviewed with Bloomberg Television. "China will continue to rely on significant imports to meet its cotton requirements."
November has seen New York and Zhengzhou's cotton futures surge as a result of preoccupations about China's domestic shortages pushing the nation to enhance imports. Thus far this year, the fabric has scaled 66 percent on ICE futures in the U.S.
"Given that [China] has run down its strategic stocks, it will be in the market trying to top up reserves," Wayne Gordon, a senior analyst at Rabobank Groep NV, told Bloomberg.
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.