The U.S. Department of Agriculture lowered its estimate of global cotton production last week, and flooding in Australia has damaged crops. Futures have more than doubled in the past year as global supplies lagged behind increased demand. The dollar dropped as much as 1.1 percent today against the euro.
“The fundamentals, along with weaker dollar, has helped cotton rise,” said Sharon Johnson, a senior analyst at Penson Futures in Atlanta.
Cotton for March delivery rose 3.5 cents, or 2.4 percent, to settle at $1.4894 a pound on ICE Futures U.S. in New York. Earlier, it jumped by the exchange limit of 5 cents to $1.5044. The price gained 5.3 percent over the past two days, the biggest rally since Dec. 21.
“There’s market expectation that China may make big deals to purchase cotton and soybeans from the U.S. during Chinese leader Hu Jintao’s visit,” said Han Sung Min, a broker at Korea Exchange Bank Futures Co. in Seoul.
China is the world’s largest user of cotton. For the year that began Aug. 1, the U.S. is forecast to be the largest exporter, followed by India, USDA data show.
Hu arrived in Washington yesterday for his first state visit to the U.S.
The China Cotton Association this week said the country’s imports in December more than doubled to 462,000 metric tons from a year earlier, citing customs data. A bale weighs 480 pounds, or 218 kilograms.
Orange-juice futures for March delivery gained 0.4 cent, or 0.2 percent, to $1.75 a pound on ICE, falling for the first time in three sessions.