Cotton prices set record high on weather fears

AP News
Posted: Oct 25, 2010 3:54 PM
Cotton prices set record high on weather fears

Cotton prices set a record high Monday amid worries that poor weather may have damaged the Texas harvest even as global supplies remain tight and demand is strong.

Cotton added 5 cents, or 4.2 percent, to settle at $1.2471 a pound Monday.

Cotton prices have staged a three-month rally fueled by a combination of factors such as poor weather in some producing regions around the world and a weaker dollar.

The higher prices haven't curbed demand because exports still are strong, Lind-Waldock senior market strategist Tom Mikulski said.

Most commodities flourished Monday because of the dollar, which grew weaker after world finance ministers promised to work to better balance global trade. Yet, they stopped short of agreeing on specific plans to avoid a currency war.

Since commodities are priced in dollars, a weaker dollar means traders who use foreign currencies can get a better bargain for such things as oil, soybeans, cotton and metals.

Looming next week is the Federal Reserve's meeting, after which the policymakers are expected to announce steps to stimulate the U.S. economy, such as buying government debt. That could add more pressure on the dollar.

Metals all settled higher on the day.

Gold for December delivery added $13.80 to settle at $1,338.90 an ounce while silver gained 42.6 cents to $23.544 an ounce.

In other metals contracts for December, copper rose 6.6 cents to $3.8630 a pound and palladium rose $17.70 to $608.80 an ounce. January platinum added $21.90 to settle at $1,697 an ounce.

With the exception of natural gas, energy contracts all rose.

Benchmark crude for December delivery rose 83 cents to $82.52 a barrel.

In Nymex trading in November contracts, heating oil edged up 0.34 cent to settle at $2.2550 a gallon and gasoline gained 1.35 cents to settle at $2.0773 a gallon. Natural gas slipped 1.5 cents to settle at $3.317 per 1,000 cubic feet.

In grains contracts for December, corn added 8.75 cents to $5.6875 a bushel and wheat rose 3.25 cents to $6.74 a bushel. January soybeans gained 18.5 cents to $12.30 a bushel.