While the recent surge in cotton futures past $1 a pound for the first time in decade is psychologically significant, the rally likely won’t surpass the $2 level reached in 2011, says Louis Rose, Director-Research, Rose Commodity Group. Adverse weather and shipping snags led to cotton futures racing past $1 a pound for the first time in nearly a decade, driving up costs for clothing around the world. In New York, the contract for December delivery climbed as much as 3.6 per cent to $1.0155 a pound, the highest since November 2011. Price has surged 28 per cent this year. Gains are being intensified by traders rushing to cover short positions.
With cotton projected to see a second year of global supply deficits, traders are focusing on an updated figure for the shortfall due this week from researcher Cotlook. The fundamentals aren’t in place for a doubling in cotton prices, adds John Robinson, Economist, Texas A&M’s AgriLife Extension in College Station. While supply chain disruptions are hurting cotton, US production fears are overhyped, he adds.
