Conjecture about buyers' demand for cotton supplies due to recent declines in prices of the soft fiber pushed up the commodity's price, Bloomberg reports.
Surging more than three percent to $1.1546 per pound on ICE Futures in New York, cotton for March delivery was trading at $1.154 just before 3 p.m. in Tokyo. Prices for cotton have plummeted 26 percent since it reached a record value on November 10.
"The prices have had enough correction from the peak," Han Sung Min, a broker at Korea Exchange Bank Futures Co. in Seoul, told Bloomberg. "Negative issues, including China's measure to curb speculation and inflation, have already been factored into the market and investors are focusing on demand amid tight supply."
As part of its effort to control inflation, China has indicated it will take measures including controlling prices and raising interest. China is considered the fasting growing economy, the biggest consumer of cotton and likely to purchase supplies.
"To control inflation, China may increase its purchases from overseas," Han told Bloomberg. "The problem is how much stockpiles in the U.S. are available for export."
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