Cotton closes at highest price since 1995

Chicago: Cotton futures rose, closing at the highest price since 1995, on concern that supplies will trail rising demand from Asia.

Global consumption will rise 2 per cent in the year ending July 31 to 25.1 million metric tonnes, the International Cotton Advisory Committee said on Thursday. China and India, the top consumers, will account for most of the gain, the group said. The ratio of year-end inventories to mill use may drop to 36 per cent, the lowest level since 1990.

"The rally is based on the continuation of tightness of supply worldwide," said Tom Reardon, the president of Delta Brokerage in New York. "The demand versus the available supply is just what's pushing us up," he said, citing imports by China and Brazil.

Ban extension

In other markets, wheat futures rose after Prime Minister Vladimir Putin indicated that Russia, a leading global exporter, may extend a ban on grain exports by as long as 11 months.

Crude oil also climbed. The UBS Bloomberg Constant Maturity Commodity Index advanced 0.8 per cent to 1,332.72.

Cotton futures for December delivery rose 2.08 cents, or 2.4 per cent, to settle at 89.49 cents a pound on ICE Futures U.S. in New York, the highest settlement for a most-active contract since October 4, 1995.

Earlier, the price reached 89.91 cents, the highest level for a most-active contract since March 5, 2008. The fibre has gained 18 per cent this year.

Wheat futures for December delivery rose 5 cents, or 0.7 per cent, to close at $7.1375 a bushel on the Chicago Board of Trade. On August 6, the price reached $8.68, the highest level for a most-active contract in two years. The grain has soared 58 per cent since June 1.

"We can only review lifting the ban on grain exports after the next year's crop is harvested and we have clarity on the balances," Putin said yesterday.

The export ban, originally set from August 15 to December 31, may last until November 2011, the time that the country normally completes its harvest.

The most-severe drought in at least 50 years has slashed production.

The drop in exports from Russia and other parts of Europe boosted demand for supplies from the US, the leading producer and shipper.

From June 1 through August 26, overseas buyers committed to purchase 14.1 million metric tonnes of US wheat, up 59 per cent from a year earlier, government data show. Russia tied last year with Canada as the second-largest exporter.

Crude oil rose for the second straight day after a platform owned by Mariner Energy in the Gulf of Mexico was struck by an explosion, bolstering concern that regulations will reduce output in the region.