Cotton Climbs to 2-Month High as Rising U.S. Exports Cut Supply

By Shruti Date Singh

April 9 (Bloomberg) -- Cotton prices jumped to the highest in almost two months on a forecast for tighter supplies as exports rise from the U.S., the world’s largest exporter.

The U.S. will ship 12.5 million bales in the year ending July 31, up from 12 million forecast last month, the Department of Agriculture said today in a report. U.S. cotton output will fall to 12.83 million bales, down from 13.04 million forecast in March, USDA said. U.S. inventories will be 6.7 million bales on July 31, down from USDA’s March estimate of 7.3 million.

“We’ve seen the exports, which were good, and the world supply and demand report came out quite bullish for U.S. fundamentals,” said Andy Ryan, an FCStone Group Inc. risk- management consultant in Nashville, Tennessee.

Cotton futures for July delivery rose 0.41 cent, or 0.8 percent, to 49.8 cents a pound at 10:07 a.m. on ICE Futures U.S. in New York. The price earlier reached 50.02 cents, the highest for a most-active contract since Feb. 10.

A weaker dollar and higher soybean and grain prices helped cotton rise, Ryan said.

The U.S. Dollar Index, which measures the greenback against six major currencies including the euro and yen, fell as much as 0.5 percent, making commodities traded in New York cheaper for overseas buyers.

Soybeans rose as much as 2 percent in overnight trading on the Chicago Board of Trade while corn gained 1 percent, increasing the incentive for farmers to plant less cotton. U.S. farmers may sow cotton on about 8.8 million acres this year, down from 9.47 million in 2008, to grow more soybeans and grains, the USDA said on March 31.

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