A weakening dollar and restriction of supplies from the globe's third-largest exporter of cotton pushed up cotton's value on Wednesday, Bloomberg reports.
An English research firm reduced estimates for the cotton harvest in Uzbekistan by as much as 5 percent, according to Atlanta, Georgia-based Penson Futures.
"Concerns about falling global supplies and a weaker dollar are pushing cotton up," Penson Futures analyst Sharon Johnson told Bloomberg. "Also, there are some technical considerations."
Just before 11:30 a.m., cotton futures increased the maximum allowed 5 cents, a 3.44 percent increase to $150.44 per bushel.
In addition, the soft commodity's value has been affected by Chinese action and diplomacy. Earlier this week the China Cotton Association said the nation's imports of cotton in December at least doubled to 462,000 metric tons as compared to the same period of 2010.
Chinese leader Hu Jintao is presently on his first state visit to the White House, where one topic of conversation with President Obama is expected to be trade and commerce.
"There's market expectation that China may make big deals to purchase cotton and soybeans from the U.S. during Chinese leader Hu Jintao's visit," Han Sung Min, a broker at Korea Exchange Bank Futures in Seoul, 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.
