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Cotton price rise causes panic buying in US
Business digest: US mills buy cotton as prices hit highest level since Civil War
A steep rise in the price of cotton has caused panic buying in mills across the US. The devastating effect of floods on cotton farmlands in Pakistan and Australia, combined with an increased demand for the fibre in China, have caused the value of cotton to jump to $1.8122 a pound – its highest level since the American Civil War.
Intercontinental Exchange (ICE) has put measures in place to prevent speculators from buying up large quantities of cotton in order to profit from the price increase.
ICE proposed that any company dealing in more than 300 contracts of Ice Cotton No2 would have to prove that their trading was "economically appropriate to the reduction of risks arising from the potential change in the value of the assets".
The cost of cotton has risen by 30 per cent since mid-January, but analysts believe that prices will now ease. "The cotton price rally looks like it contains elements of panic now," said Carsten Fritsch, a commodities analyst at Commerzbank. "We believe the price of cotton is already in a phase of exaggeration and expect a sharp fall in price in the coming months."
Read a full report at the Daily Telegraph.
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