Cotton Rebounds on ‘Ugly’ Crop Outlook;

Cotton Rebounds on ‘Ugly’ Crop Outlook;---bloomberg

By Ashley Lutz - May 6, 2011 9:58 AM ET
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Business ExchangeBuzz up!DiggPrint Email .Cotton rebounded from a three-month low in New York on speculation that adverse weather in Texas will hurt output in the U.S., the world’s biggest exporter. Orange juice declined.

Parts of Texas, the country’s biggest cotton producer, are in “extreme” or “exceptional” drought, the most-severe rankings on the University of Nebraska at Lincoln’s U.S. Drought Monitor. Farmers should hold off on planting because the soil is too dry, the Texas Agrilife Extension Service said in a statement yesterday.

“The outlook for the new crop of cotton is ugly, and the U.S. crop could be dramatically small,” said Gary Raines, an economist at FCStone Fibers & Textiles in Nashville, Tennessee. “This could work to counteract all the bearishness.”

Cotton for May delivery gained 1.28 cents, or 0.9 percent, to $1.4814 a pound at 9:56 a.m. on ICE Futures U.S. in New York. Earlier, the commodity touched $1.438, the lowest since Jan. 18, as a stronger dollar reduced investor demand for raw materials as alternative assets.

Before today, prices tumbled 33 percent since reaching an all-time high of $2.197 on March 7. The fiber is still up more than 80 percent in the past year as demand surged in China, the largest user and importer.