U.S. Commodities: ‘Berserk’ Cotton Tops $2 as China Use Soars

Cotton topped $2 a pound for the first time ever as accelerating global growth boosted demand for garments manufactured in China, the world’s biggest fiber consumer and importer, amid shrinking supplies.

China’s apparel exports in January surged 34 percent to $13.38 billion from a year earlier, the Customs Bureau said this week. Cotton stockpiles monitored by ICE Futures U.S. have plunged 84 percent since June 1, and flooding in Australia and Pakistan reduced output.

“The bulls have gone berserk, and it looks like they want prices to go higher,” said Sid Love, the president of Joe Kropf & Sid Love Consulting Services LLC in Overland Park, Kansas. “China’s demand still remains strong.”

In other markets, silver surged to a 30-year peak and gold climbed to a one-month high as rising consumer prices boosted investor demand for precious metals as an inflation hedge. Corn also gained. The UBS Bloomberg Constant Maturity Commodity Index advanced 0.4 percent to 1,713.06.

Cotton for May delivery rose by the exchange limit of 7 cents, or 3.6 percent, to settle at a record $2.0193 on ICE Futures U.S. in New York. The contract with the highest open interest has more than doubled in the past 12 months and quadrupled in two years.

Cotton for March delivery jumped by the maximum to $2.0402.

Silver, Gold

Silver futures for March delivery rose 94.1 cents, or 3.1 percent, to close at $31.57 an ounce on the Comex in New York. After the settlement, the metal reached $31.79, the highest since March 1980. The price has almost doubled in the past year.

Gold futures for April delivery climbed $10, or 0.7 percent, to $1,375.10 an ounce. After the settlement, the price reached $1,385.80, the highest since Jan. 13. The metal has gained 24 percent in the past 12 months.

The U.S. cost of living climbed in January for a seventh month, the government said today. The U.K. consumer-price index rose to a 26-month high last month, a report this week showed. Gold climbed to a record in December as the Federal Reserve kept U.S. borrowing costs low.

“Silver will pull gold higher,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “The market has turned its attention to geopolitical fear, food inflation and the Fed not changing its stance.”

Corn

Corn rose to a 31-month high on signs that global demand is increasing for supplies from the U.S., the world’s largest grower and exporter.

U.S. export sales in the week ended Feb. 10 were 15 percent above the average of the previous four weeks, the government said today. Sales topped 1 million tons for the third straight week, the longest stretch since June. The leading buyer was Mexico after freezing weather damagedcrops.

“Demand continues to show improvement,” said Mark Schultz, the chief analyst at Northstar Commodity Investment Co. in Minneapolis. Mexico’s crop losses spurred fresh U.S. sales.”

Corn futures for May delivery rose 22 cents, or 3.1 percent, to $7.23 a bushel on the Chicago Board of Trade. Earlier, the price reached $7.245, the highest for a most-active contract since July 2008. The grain has jumped 94 percent in the past year,

Commodities settled as follows:

Precious metals: April gold up $10 to $1,385.10 an ounce March silver up 94.1 cents to $31.57 an ounce April platinum up $9.70 to $1,844 an ounce March palladium up $4.65 to $843 an ounce

Livestock: April live cattle up 0.925 cent to $1.151 a pound March feeder cattle up 0.125 cent to $1.306 a pound April lean hogs up 0.275 cent to 92.175 cents a pound February pork bellies unchanged at $1.21 a pound

Grains: May soybeans up 38 cents to $14.165 a bushel May corn up 22 cents to $7.23 a bushel May wheat up 14 cents to $8.835 a bushel May oats up 10.75 cents to $4.2275 a bushel

Food and Fiber: May coffee up 7.25 cents to $2.6885 a pound May cocoa up $17 to $3,438 a metric ton May cotton up 7 cents to $2.0193 a pound May sugar down 0.36 cent to 28.86 cents a pound May orange juice up 0.85 cent to $1.72 a pound

Energy: March crude oil up $1.37 to $86.36 a barrel March natural gas down 5.3 cents to $3.868 per million British thermal units March heating oil down 4.24 cents to $2.7324 a gallon March gasoline down 1.7 cents to $2.5277 a gallon

Others: May copper up 1.45 cents to $4.497 a pound May lumber down $5.90 to $322.60 per 1,000 board feet.

(Source: http://www.bloomberg.com/news/2011-02-17/u-s-commodities-berserk-cotton-tops-2-as-china-use-soars.html)