Cotton price hits record - and 'has further to go' ? Agrimoney:
Cotton's rally may still have further to go, even after prices hit record highs on Monday, spurred by fears that storms damaged crops in the key US growing state of Texas. On China's Zhenghou exchange, cotton jumped by the maximum amount allowed by market rules to end up 5.0% at an all-time high of 26,270 yuan a tonne, for the benchmark May contract. The fibre went limit up in New York too, where the December cotton closed at a record 124.71 cents a pound, adding the maximum 5.0 cents allowed by the Ice exchange. And these rises may not mark the end of the rally which has driven New York futures up by more than 50% over the last two months, Sudakshina Unnikrishnan, at Barclays Capital, said. Hail adds to fears
"Prices may have not even hit their highest levels to judge by fundamentals," Ms Unnikrishnan told Agrimoney.com. "We have not seen any deterioration in fundamentals." Indeed, fears for supplies were stoked by weekend storms in Texas, which produces roughly half the cotton in America, the world's top exporter of the fibre. Ker Chung Yang, at Phillip Futures in Singapore, said that Monday's price rises reflected "concern that a hailstorm damaged crops in Texas".
Export support
Meanwhile, demand for cotton among importers, notably China, remains strong, with latest US weekly export sales of some 200,000 tonnes, while below recent peaks, still "very healthy", Ms Unnikrishnan said. At Hightower Report, Terry Roggensack said: "The strong pace of export sales suggests that usage could far exceed the US Department of Agriculture's current estimate for 2010-11, particularly on the export side, and this is making sellers nervous." However, Ms Unnikrishnan, who earlier this year correctly called the cotton rally, declined to forecast where it may end, saying that prices were in "completely uncharted territory from here". END
