Cotton Advances to Record for Third Day as Demand May Increase

Cotton futures surged to a record for a third straight day as increased U.S. export sales boosted speculation that demand will continue to grow.

Cotton for March delivery rose as much as 2.7 percent to $1.9263 a pound on ICE Futures U.S. and traded at $1.8861 at 11:18 a.m. in London. The fiber has jumped 12 percent this week, the biggest increase since week of Dec. 3.

“The U.S. export sales showed that despite the high price of cotton, demand isn’t dipping,” Ker Chung Yang, an analyst at Phillip Futures Pte, said by phone from Singapore.

U.S. export sales rose 26 percent in the week to Feb. 3 from a week earlier, the Department of Agriculture said yesterday. Global output will be 115.25 million bales in the year to July 31, 0.2 percent lower than a January forecast, with demand at 116.55 million bales, the USDA said Feb. 9. Prices have advanced 31 percent this year.

Output this year from Central Asia will be 7.02 million bales, down 2.1 percent from last month’s projection, according to the USDA.

ICE Futures U.S. will raise the margin requirement for cotton trades to $5,000, up by $1,000, starting today, the New York exchange said yesterday in an e-mailed statement.

(Source: http://www.bloomberg.com/news/2011-02-11/cotton-advances-to-record-for-third-day-as-demand-may-increase.html)