Cotton Plunges as U.S. Cuts Export Forecast on Slowing Economy

By Shruti Date Singh

Oct. 10 (Bloomberg) -- Cotton plunged to a 16-month low, dropping the most allowed by ICE Futures U.S. in New York, after the government cut its export forecast by 10 percent because the slowing economy will curb demand for textiles.

The U.S., the world's biggest cotton exporter, will ship 13 million bales in the year that began Aug. 1, less than the 14.5 million expected in September and below last year's shipments of 13.65 million, the Department of Agriculture said. The average estimate of seven analysts and traders in a Bloomberg survey was 13.7 million bales. Cotton prices are down 27 percent this year.

``We are in a dramatic economic slowdown as witnessed by the huge cut in the U.S. export projection and reduced world usage,'' Mike Stevens, an analyst with Swiss Financial Services in Mandeville, Louisiana, said today in an e-mail after the report.

Cotton futures for December delivery declined the exchange's 3-cent limit, or 5.7 percent, to 49.44 cents a pound at 9:14 a.m. on ICE. That is the lowest price for a most-active contract since May 24, 2007.

To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.