Economic growth in China and India is serving as a driver for cotton demand, whose futures are expected to continue rising, Bloomberg reports.
The epic climb of cotton, one of the best performing commodities during the past 12 months, saw the commodity double in value and reach all-time record highs. China, the biggest consumer of the soft fiber, is experiencing especially strong demand while it and India experience rising incomes.
"Consumption is closely entwined to economic prosperity," Jagdish Parihar, managing director of the cotton division at Singapore-based farm commodity trader Olam, told Bloomberg in an interview in Dubai. "Three-to-four percent sustained demand growth is quite a realistic possibility."
Shortly prior to 10 a.m. on Tuesday, cotton futures were down 3.54 percent, a 0.07 cent drop to $1.9094 per pound.
"The cotton market is part of the agricultural complex which is itself undergoing a significant demand-supply imbalance as a result of the economic and commodity supercycle that we are experiencing," Parihar told the publication. "Food inflation is high, and therefore cotton will always be fighting for acres."
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