CACAU + CAFÉ - WALL STREET JOURNAL, BREVE PARTICIPAÇÃO CAZARINI TRADING COMPANY... Cotton Futures Prices at Lowest in Five Years on Demand Worries Market Damped by Foreign Buyers Cancelling Orders and IMF Cutting Economic Forecast By LESLIE JOSEPHS And ALEXANDRA WEXLER Updated July 24, 2014 3:32 p.m. ET NEW YORK—Cotton prices tumbled to their lowest in nearly five years on Thursday, as a weaker global economic outlook reinforced expectations of poor demand. Cotton for December delivery on the ICE Futures U.S. exchange fell 3% in price to 66.05 cents a pound, the lowest settlement for the most-actively traded contract since Oct. 13, 2009. It was the largest one-day drop since June 18. The International Monetary Fund cut its global economic growth forecast for this year to 3.4% from an April forecast of 3.7%, damping sentiment in the market. Cotton prices are particularly sensitive to economic data, since demand for the fiber is tied to consumer spending on items such as apparel, bed sheets and towels. Poor economic performance is certainly going to cut into commodity usage, said Sharon Johnson, a cotton specialist and introducing broker for KCG Futures in Atlanta. Cotton futures are trading below their 10-year average of about 74 cents a pound and the 20-year average of 69 cents a pound. And the latest data show cotton demand is already slipping. The U.S. Department of Agriculture reported on Thursday that foreign buyers had canceled some of their orders for the fiber. Net export sales of upland cotton, the variety most commonly grown in the U.S., for the current marketing year were reduced by 1,900 bales during the week ended July 17. The marketing year ends July 31. Cotton prices are also struggling because of a pickup in U.S. production. Earlier this month, government forecasters increased their estimate for U.S. cotton production during the season that begins Aug. 1 by 10% to 16.5 million 480-pound bales, exceeding market expectations for a 4.7% increase from Junes estimate. The drop in cotton prices could spark defaults from mills that contracted cotton at higher prices, said Jordan Lea, co-owner of Greenville, S.C., cotton merchant Eastern Trading Co. After prices plunged from a post-Civil War high three years ago, a wave of defaults by mills hit balance sheets at some of the largest cotton traders, sparking a wave of legal battles, some of which are still unresolved. Its always the elephant in the room, Mr. Lea said. Anytime you get a move down like this, the risk exists. In other markets, cocoa for delivery in September on ICE climbed 0.4% in price to $3,198 a ton, a new three-year high, as demand for the chocolate ingredient continued to boost prices. It was the sixth consecutive session of gains for cocoa prices, after demand in North America and Asia beat analysts expectations. Cocoa processors in Asia ground 161,805 metric tons of beans in the second quarter of the year, up 5.2% from the same period of 2013, the Cocoa Association of Asia said this past Friday. The report followed a 4.5% increase in North American second-quarter cocoa grindings, which topped market estimates of 2%-3%. On Thursday, a unit of Mars Inc. said it has raised prices for U.S. chocolate products by about 7% to offset rising costs. The M&Ms and Snickers makers announcement comes a week after Hershey Co. HSY -0.76% raised its prices by 8% because of higher costs for cocoa, milk and other commodities. Meanwhile, the price of Arabica coffee for September delivery rose to its highest in four weeks, ending up 1% at $1.7830 a pound, as a forecast for rains in top grower Brazil added to worries about the size and quality of the crop this season and next. Rains could cause an early flowering and reduce output, said Thiago Cazarini, a coffee broker in Varginha, Brazil. Its bad because most of the flowers [at this point] will not turn into fruit, he said. He added that rains could also damage the quality of recently harvested coffee beans that are drying on patios. Orange juice for delivery in September settled down 1.8% at $1.4980 a pound, the lowest close since July 11, while raw sugar for October delivery ticked 0.5% higher to 17.05 cents a pound. -Write to Leslie Josephs at leslie.josephs@wsj and Alexandra Wexler at alexandra.wexler@wsj
Posted on: Mon, 28 Jul 2014 19:56:39 +0000
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