China and its seemingly insatiable appetite for cotton have helped push up the commodity’s futures 22 percent thus far in 2011. And with Chinese president Hu Jintao visiting the U.S. last week on a state visit, those purchases are likely to continue.
In 2010, China imported 2.84 million tons of cotton. The U.S., which is the largest exporter of the commodity, has taken orders for 2.9 million bales of cotton to China this year, as of January 13.
"It's a tight supply situation," Ker Chung Yang, an analyst with Phillip Futures in Singapore, told Bloomberg.
Last Friday, cotton was among the commodities a Chinese delegation to the U.S.-China Trade and Economic Cooperation Forum agreed to buy. How much and for what price was not disclosed. But China's appetite for the soft commodity and other commodities might adjust should China increase interest rates prior to next week's Chinese Lunar New Year.
Shortly before 10 a.m. on Thursday, cotton futures were up 2.37 percent, a 0.0395 increase to $1.7078 per pound. Earlier in the day, cotton futures increased 0.06 cents, the maximum allowed.
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