Cotton Rises to Two-Month High on Economy; Orange Juice Declines


Cotton futures jumped to a two month-high on speculation that better-than-expected economic data in China, the U.S. and Germany signals higher demand for raw materials. Orange juice dropped.

Global equities rallied after gross domestic product in China, the world’s second-largest economy, grew 8.9 percent in the fourth quarter, above the median in a Bloomberg News survey. A U.S. Federal Reserve report showed manufacturing in the New York region increased at the fastest pace in nine months, and German investor confidence rose by a record.

“It is definitely a ‘risk-on’ trading day for the speculators,” Mike Stevens, an independent trader in Mandeville, Louisiana, said in an e-mail. “Positive economic news coming out of China” and “strong outside markets,” triggered the rally, he said.

Cotton for March delivery rose 2.8 percent to settle at 98.19 cents a pound on ICE Futures U.S. Earlier, the price gained as much as 4 cents, the exchange limit, to 99.47 cents, the highest for a most-active contract since Nov. 17. The price has gained 7 percent this month.

The dollar fell as much as 0.9 percent today against a basket of six currencies, enhancing the appeal of commodities as alternative investments, Stevens said.

China is the world’s top cotton consumer, and the U.S. is the biggest exporter.

Orange-juice futures dropped 0.1 percent to $1.8435 a pound in New York. Earlier, the price jumped as much as 4.1 percent. The commodity has climbed 9.1 percent this month.

On Jan. 9, the U.S. Food and Drug Administration detained orange-juice imports to investigate the use of a fungicide on fruit in Brazil. Carbendazim has been linked to liver tumors in animals.

The FDA said today that holding imports may continue through July while more samples are tested.

Brazil is the world’s biggest orange grower, followed by Florida.