Cotton Advances to Three-Week High as Deadly Floods Damage Australian Crop

Cotton futures in New York extended gains to a three-week high after deadly floods damaged crops in Australia, the world’s fourth-largest supplier.

The March-delivery contract rose as much as 4.91 cents, or 3.3 percent, to $1.5216 a pound, the highest price since Dec. 23, on ICE Futures U.S. in New York before trading at $1.5098 by 5:54 p.m. Tokyo time. The contract yesterday jumped by the exchange limit of 4 cents.

Flooding in Australia’s Queensland state has killed 23 people and left 67 missing with waters in Brisbane expected to peak tomorrow in what may be the city’s worst flood since 1893. Cotton prices have doubled in the past year on signs that global supplies will fail to meet rising demand from China, the world’s largest user. The price reached to a record $1.5912 on Dec. 21.

“The flooding in Australia has fueled concern over tight supply,” said Han Sung Min, a broker at Korea Exchange Bank Futures Co. in Seoul.

A La Nina event, which has brought deadly floods to Australia’s north and withered corn and soybean crops in Argentina, may extend into the second quarter of this year, according to theBureau of Meteorology.

“The La Nina will last well into autumn at least,” David Jones, head of climate monitoring and prediction at the bureau, said today by phone from Melbourne. “The start to 2011 in eastern Australia is expected to continue to be wet,” he said. Autumn in Australia is from March to May.

“We’ve probably written off 65,000 hectares of cotton in Queensland,” Wayne Gordon, an analyst at Rabobank Groep NV, said an interview today with Bloomberg Television.

Crop losses total about 300,000 bales, and damage may worsen if wet weather continues, the Australian Cotton Shippers Association said yesterday. The group had forecast record production of more than 4 million bales before the floods.

For the year started Aug. 1, the U.S. is forecast to be the largest exporter, followed by India and Uzbekistan, government data show. September cotton on the Zhengzhou Commodity Exchange rose 1.2 percent to close at 29,160 yuan ($4,413) a ton.

(Source: http://www.bloomberg.com/news/2011-01-12/cotton-advances-to-three-week-high-as-deadly-floods-damage-australian-crop.html)