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Cotton price rises to two-week high on ice on fear of output drop in china

Cotton price rises to two-week high on ice on fear of output drop in china Source:
Date: 27-11-2013
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Cotton prices have been see-sawing for some time now, gyrating on production news from top producing countries. On the ICE, cotton prices jumped to a two-week high on 21 November after China predicted its harvest will decline 12.3 per cent this year as an early frost adversely impacted its yields. The most-active March cotton contract on ICE Futures US gained US cent 0.58 cent, or 0.7 percent, to settle at US cents 78.14 per pound, near the contract's 10-14-day moving averages. Pressure also came as speculators defended a net short position and on heavy liquidation of the December contract ahead of its first notice day later this week.
Early in the day, the benchmark had touched a two-week high of US cents 79.45 and pared gains steeply in the final hour of trade. The spot December contract closed down US cent 0.25, at US cents 75.63 per pound. The fibre tracked US stocks markets as the Dow Jones industrial average began to fade ahead of the release of minutes from last month's Federal Reserve meeting. The central bank was considering scaling back its huge fiscal stimulus program at one of its next few meetings.
In China, domestic prices also rose as traders eyed a possible delay of an expected sale from Beijing's massive state reserves. Reports said that not only the crop is shorter, the quality is also poor. The output is likely to drop 12.3 per cent to 6.68 million tons this year due to early frosts and snow in the country's top growing region, said the latest survey commissioned by the state reserves body. Production projection of about 30.7 million 480-lb bales is also well below a US government forecast of 32.5 million bales for 2013/14 crop year ending July.
In other countries, caterpillars are attacking crops in Brazil and rainfall in India has hampered harvesting in the world's No 2 producer. The gains came despite a continued climb in exchange inventories.
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