Increasing demand for cotton from China threatened to endanger the global supply of the soft fiber, pushing up the commodity to the maximum allowed on ICE Futures US, Bloomberg reports.
March-delivery cotton futures rose 0.05 cents, a 3.2 percent increase to $1.6194 per pound just before noon in Tokyo. As the globe's largest consumer, China imported 86 percent more cotton in 2010 than the year prior, a change attributable to economic growth in the rising tiger.
"Cotton was supported by China's import data and speculation that the country will buy more before the Lunar New Year holidays," Han Sung Min, a broker at Korea Exchange Bank Futures in Seoul, told Bloomberg.
Shortly after 12:30 a.m., cotton futures in New York were valued at $1.6194 per pound, a 3.19 percent increase of 0.05 cents.
March-delivery cotton futures have gained five-straight days. The contract last week increased 11 percent.
The U.S. Agriculture Department slashed estimates for global production on January 12. Global production of the commodity will be 115.46 bales, representing a 0.1 percent decrease from the expected output issued on January 12.
Cotton stockpiles for 2010-2011 are projected to be 9.3 million tons, which equals 42.8 million bales, according to the Commonwealth Bank of Australia. That figure represents the most constricted amount since 1995-1996.
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.
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.
