On Monday cotton futures gained over supply concerns, reaching their biggest one-day rally in 2-1/2 weeks. The most-active December cotton contract on ICE Futures US settled higher, up 0.74 cents, or 1.2 percent, at 65.05 cents a pound. In the recent week, worries over near-term supplies has lifted the second-month ICE contract to a premium above third-month March futures, reports the Business Recorder.
Australia, the world's third-largest cotton exporter, trimmed its production expectations by 29 percent due to dry conditions that curb yields. Cotton futures in New York dropped 24 percent this year and have shown the biggest losses in the Bloomberg Commodity Index. Meanwhile, increased output in the biggest exporter, the U.S., adds to record global reserves. Last month Australian output was forecasted by Cotton Australia to fall as much as 50 percent as drought in Queensland and dry conditions in parts of New South Wales impact the plant, according to Bloomberg.
The news source reports that the state government has said approximately 75 percent of Queensland is in drought. Cotton Australia Chief Executive Officer Adam Kay reported last month that there is likely to be a decline between a range of 2 million and 2.5 million bales in 2014-2015 from about 4 million bales this year.
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