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Cotton gains on forecast of lower stockpiles, output

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Bloomberg Mumbai

The US, the biggest exporter, will harvest 14 million bales in the year starting August 1, down from 14.5 million forecast in June, the USDA said in a report. Global output will reach 114.9 million bales, down from 116.4 million projected last month, as India harvests a smaller crop. World stockpiles may reach 53.2 million bales, down from 54.1 million forecast last month and 61.3 million expected this year, the USDA said.

 

"When you lower world ending stocks, that's friendly,'' said John Flanagan, president of Flanagan Trading in Fuquay-Varina, North Carolina, referring to global inventories.

Cotton futures for December delivery rose 0.01 cent to 73.59 cents a pound on ICE Futures US, the former New York Board of Trade. The price fell 2.3 per cent for the week, partly as rain improved crop conditions in Texas and US exports continued to slump.

India, the second-largest producer, will harvest 25.5 million bales, down from 26.5 million projected in June, the USDA said. A bale of cotton weighs 480 pounds, or 218 kilograms.

India and the US compete to sell cotton to China, the world's largest producer and consumer.

The surge in crude oil, which often leads commodity prices, also may be supporting cotton, Flanagan said. Crude oil rose to a record $147.27 a barrel today.

Most-active cotton futures have gained 8.2 per cent this year partly on forecasts that US farmers would switch acres to corn, soybeans and wheat, which have all reached records this year.

The USDA said on June 30 that 9.25 million acres were sown with cotton this year, down from 10.8 million last year. Some acreage may be abandoned because dry weather has hurt crops in Texas, the country's largest grower.

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First Published: Jul 13 2008 | 12:00 AM IST

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