Prices for cotton have increased as the fourth-biggest exporter of the soft commodity endured its worst flooding in 50 years, Bloomberg reports.
The U.S. Agriculture Department last month forecast Australia will generate four million bales of cotton. But Rabobank International reduced that figure by 8 percent and estimated Australia's cotton production will be 3.95 million bales by July 31.
"The fundamentals are strong," Peter Egli, director of risk management in Chicago at Plexus Cotton, told Bloomberg. "’There is an absence of sellers in the market."
Prior to Monday, cotton prices have skyrocketed 93 percent during the past year. Flooding in Northeast Australia comes as the nation's rainy season begins and stretches through late March. A strong demand for the soft commodity also has steadily reared from China.
Department of Agriculture will update the crop outlook on Wednesday, when it likely will take into consideration Australia's struggle with heavy rains and floodwater.
March-delivery cotton increased 1.35 percent, a 1 percent rise to $1.4195 per bushel shortly after 10 .m. in New York. Its record price was $1.5912 per bushel, which it struck on December 21.
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