Cotton Rises for First Time in Five Sessions on China’s Demand

Cotton futures rose for the first time in five sessions on signs that demand in China, the world’s biggest consumer of the fiber, may be steady amid the global economy’s slump.

The China Cotton Index delivered mill price has gained 4.2 percent this year as the country increased reserves, while futures in New York fell more than 10 percent. U.S. upland cotton export sales to China in the week ended Feb. 12 soared to 200,000 bales from 9,700 bales a week earlier, according to government data. The U.S. is the world’s largest exporter.

“Either Chinese prices have to come down, or U.S. prices have go up,” said Ron Lawson, a managing director of Lawson/ O’Neill Global Institutional Commodity Advisors LLC in Sonoma, California. “Chinese demand has remained more stable than market expectations would have led you to believe.”

Cotton futures for May delivery rose 0.06 cent, or 0.1 percent, to 43.84 cents a pound at 12:20 p.m. on ICE Futures U.S. in New York. Earlier, the price touched 43.51 cents, the lowest for a most-active contract since Dec. 15.

Cotton sales in China rose last week as domestic demand for apparel and textile products rebounded after recent holidays, the China Cotton Association in Beijing said Feb. 23.

The government purchased 2.11 million metric tons of ginned cotton from domestic growers by Feb. 20, or 78 percent of planned purchases, according to the group, made up of farmers, cotton ginners, textile mills and industry researchers.

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Source:Bloomberg.com