Cotton falls on concerns about future demand

AP News
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Posted: Mar 28, 2011 4:12 PM
Cotton falls on concerns about future demand

Cotton prices fell 3.4 percent Monday on concerns that mills may cut back purchases because of persistently high prices and tight supplies.

Cotton for May delivery lost 7 cents to settle at $1.9749 a pound.

Cotton prices have risen about 36 percent this year, partly on hopes that demand will remain strong.

Some mills have begun to switch to synthetic fibers, however, in part because they are unable to absorb the high costs or have been unable to fill orders for cotton, according to a recent report from Cotlook Ltd., which follows the industry.

"We're going to really start to see mills backing off more and more ... because they simply can't afford it," Penson/FCG analyst Sharon C. Johnson said.

There is also speculation demand may erode in China because of the government's ongoing efforts to curb inflation, she said.

Other agricultural commodities were mixed ahead of a much anticipated government forecast that should provide more details about what types of crops farmers will plant this year.

Global supplies of corn, soybeans and cotton remain tight. Wheat supplies are more plentiful worldwide but there is the potential they could be reduced because adverse weather may have affected the winter wheat crop in the Great Plains.

In May contracts, wheat prices fell 8 cents to settle at $7.2525 a bushel, corn lost 18.5 cents to $6.71 a bushel and soybeans dropped 9.75 cents to $13.485 a bushel.

Oil prices dropped after Libyan rebels recaptured some key oil ports and promised to resume exports.

Much of this year's jump in oil prices has occurred on speculation about potential supply disruptions due to uprisings in several countries in the Middle East and North Africa.

Energy analysts still are concerned that the clashes could hurt world supplies and draw OPEC heavyweights Saudi Arabia and Iran into a conflict.

Benchmark crude for May delivery fell $1.42 to settle at $103.98 per barrel on the New York Mercantile Exchange.

In Nymex trading for April contracts, heating oil lost 3.03 cents to settle at $3.0412, gasoline fell 2.19 cents to $3.0276 per gallon and natural gas dropped 4.2 cents to $4.448 per 1,000 cubic feet.

The May contracts for gold fell $6.30 to settle at $1,419.90 an ounce while silver added 3.9 cents to $37.088 an ounce.

May copper lost 6.9 cents to settle at $4.35 a pound, June palladium fell $4.70 to $745.70 a pound and April platinum added $2.20 to $1,747.80 an ounce.