New York: Cotton rose on speculation the US government will cut its estimate on the number of acres planted with the fibre as farmers switch to more profitable crops.
The department of agriculture will announce its new acreage estimate on 29 June. The agency on 30 March estimated that farmers will plant 12.2 million cotton acres this year, down 26% from last year.
“Cotton is being supported by concerns that the USDA will lower acreage once again,” Mike Zarembski, an analyst with optionsXpress Inc. in Chicago, said in an email. Analysts expect the estimate to drop to around 11.8 million acres, he said.
Cotton futures for December delivery gained 0.66 cent, or 1.1%, to 61.45 cents a pound on the New York Board of Trade.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
The price has gained 15% in the past 12 months, partly on speculation China will increase imports. Forecasts for a smaller US crop and unfavourable US weather also had boosted futures.
Farmers are switching to corn as demand rises for ethanol, a fuel made from the grain. Corn futures have gained 68% this past year.
The US is the largest exporter of cotton. China is the world’s biggest cotton grower and importer.