Cotton price causes 'panic buying' as nears 150-year highCotton prices hit their highest levels since the American Civil War yesterday, in what analysts describe as "panic" buying by mills. Cotton prices have risen by 30 percent since mid-January, prompting stricter limits on speculative positions taken bytraders.
Photo: BLOOMBERG
By Garry White 6:00AM GMT 04 Feb 2011
Floods in major cotton producing areas in Australia, Pakistan and China have hurt supply at the same time as demand from China, the world's largest user of the fibre, is soaring.
Cotton for March delivery jumped as much as 24% to $1.8122 a pound in New York yesterday.
However analysts believe that prices may now ease, as the National Cotton Council of America releases the results of its survey on planting intentions today. It's expected to show an increase in US farmland dedicated to cotton in the current growing season.
"The cotton price rally looks like it contains elements of panic now," said Carsten Fritsch, a commodities analyst at Commerzbank. "We believe the price of cotton is already in a phase of exaggeration and expect a sharp fall in price in the coming months," he added.
"It's basically mills panicking," Lou Barbera, a cotton analyst for VIP Commodities told Reuters. "Overseas mills are getting the ball rolling."
Cotton prices have risen by 30pc since mid-January, prompting Intercontinental Exchange (ICE) to tighten limits on speculative positions in futures contracts traded on its exchange.
ICE has proposed that any party trading in more than 300 contracts of the Ice Cotton No2 March future would have to show it was "economically appropriate to the reduction of risks arising from the potential change in the value of the assets".
This limit is the equivalent of 30,000 bales of cotton.
http://www.telegraph.co.uk/finance/markets/8301886/Cotton-price-causes-panic-buying-as-nears-150-year-high.html
Photo: BLOOMBERG
By Garry White 6:00AM GMT 04 Feb 2011
Floods in major cotton producing areas in Australia, Pakistan and China have hurt supply at the same time as demand from China, the world's largest user of the fibre, is soaring.
Cotton for March delivery jumped as much as 24% to $1.8122 a pound in New York yesterday.
However analysts believe that prices may now ease, as the National Cotton Council of America releases the results of its survey on planting intentions today. It's expected to show an increase in US farmland dedicated to cotton in the current growing season.
"The cotton price rally looks like it contains elements of panic now," said Carsten Fritsch, a commodities analyst at Commerzbank. "We believe the price of cotton is already in a phase of exaggeration and expect a sharp fall in price in the coming months," he added.
"It's basically mills panicking," Lou Barbera, a cotton analyst for VIP Commodities told Reuters. "Overseas mills are getting the ball rolling."
Cotton prices have risen by 30pc since mid-January, prompting Intercontinental Exchange (ICE) to tighten limits on speculative positions in futures contracts traded on its exchange.
ICE has proposed that any party trading in more than 300 contracts of the Ice Cotton No2 March future would have to show it was "economically appropriate to the reduction of risks arising from the potential change in the value of the assets".
This limit is the equivalent of 30,000 bales of cotton.
http://www.telegraph.co.uk/finance/markets/8301886/Cotton-price-causes-panic-buying-as-nears-150-year-high.html