Cotton Futures Soar with China Demand

The world’s biggest user and importer of cotton – China – is playing a key role in the direction of cotton futures.  Trading up to highs not seen since October, cotton futures spiked higher on the outlook demand for cotton there is progressing.

Government officials in China stated only yesterday they have been selling off state cotton reserves this week in order to meet demand at their domestic mills.  Cotton imports in China are said to have risen by 75% last month, compared to amounts the prior month, and even our USDA recently boosted their estimates for Chinese cotton imports by almost 9%.

Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, stated today regarding the current cotton futures situation, “China has been releasing cotton from it’s reserves, but the quality of this cotton is rumored to be poor. This is creating the potential need for China to be a heavy importer of U.S. cotton.”

Cotton futures trend is clearly up, and we are long this market.  No sign of a top for cotton futures in sight.

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