By Carolyn Cui
Cotton rose sharply higher Wednesday, as an industry report fueled expectations of higher demand for textiles this year.
Cotton futures for March delivery soared 3.4% to 74.19 cents a pound, the highest intraday level since August 9. Wednesday's move would also make it the largest one-day percentage increase since September 1.
The sleepy cotton market got a wake-up call late Tuesday, when the International Cotton Advisory Committee unveiled its latest forecast for global cotton markets in 2016/2017. Though the agency raised its estimates for global production to 22.77 million tons, or an 8% increase from a year earlier, it also continued to see demand stay robust at 24.13 million tons.Under that assumption, the international cotton market is likely to see its second consecutive deficit and worldwide stocks to fall to 18 million tons, according to the ICAC.
Jack Scoville, a Chicago-based analyst with Price Futures Group, said that this suggested the U.S. Department of Agriculture would "be forced" to increase its demand forecasts and cut ending stocks in the coming reports, unless U.S. domestic crop showed an increase in January.
However, other analysts warned that "this will be attributable solely to China," said analysts at Commerzbank.
The world's largest cotton buyer has been slashing its state reserves in recent years, while its own production has been falling.
"If China is left out of the equation, the ICAC estimates that stocks in the rest of the world will grow by 6% to 8.7 million tons," analysts wrote in a Wednesday note.
In other markets, cocoa for March was up 3.3% to $2,238 a ton, arabica coffeefor March rose 3.2% to $1.4175 a pound, frozen concentrated orange juice for March was down 0.4% to $1.9375 a pound and March sugar rose 1.6% to 20.84 cents a pound.
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(END) Dow Jones Newswires
January 04, 2017 12:04 ET (17:04 GMT)
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