Cotton futures rallied the most in a week after the U.S. Department of Agriculture boosted its forecast of imports by China, the world’s largest user.
China will import 14 million bales in the year ending July 31, or 12 increase more than the 12.5 million expected in January, the USDA said today in a report. A bale of cotton weighs 480 pounds. Prices that tumbled last year to a 32-month low have gained 10 percent this year on signs of improved demand and smaller global crops, including in the U.S.
“Higher Chinese imports mean cheaper stocks in the rest of the world have become a lot tighter, which is bullish,” Peter Egli, the director at Chicago-based Plexus Cotton Ltd., said today by telephone.
Cotton for March delivery rose 1.6 percent to settle at 82.67 cents a pound at 2:30 p.m. on ICE Futures U.S. in New York, the biggest gain since Jan. 29.
Prices fell 1.9 percent this week through yesterday on signs of slowing demand for supplies from the U.S., the world’s largest exporter. Cotton has slumped 62 percent since reaching a record $2.197 on March 7, 2011.
“The USDA forecasts suggest Chinese import pace will not fall off, and this is a key supportive factor for old-crop prices,” analysts at Rabobank including Luke Chandler said in an e-mailed report.