Southeastern flooding sends cotton futures up

Cotton futures gained the most in almost two months in Monday trading after floods hurt crops in the Southeast, curbing further the outlook for supplies from the U.S., the world's biggest exporter.

As much as 16 inches of rain drenched South and North Carolina over the weekend, according to MDA Weather Services in Gaithersburg, Md. The deluge came as American growers harvest a smaller crop after low prices spurred farmers to plant less. Cotton prices slumped 29 percent last year as global stockpiles remained near record levels.

"When you get rains of these epic proportions, you get cotton damaged one way or another," David Ruppenicker, chief executive officer of trade group Southern Cotton Growers Inc., said in a telephone interview from Dawsonville, Ga. "There's no question that crops will be hurt from the quality standpoint, and some yields will be lost, too," especially in South Carolina, parts of North Carolina and eastern Georgia, he said.

Cotton for December delivery jumped 2.9 percent to settle at 61.87 cents a pound by 2:25 p.m. on ICE Futures U.S. in New York, the biggest increase for a most-active contract since Aug. 12.

In the season started Aug. 1, U.S. production will fall 18 percent from a year earlier to 13.43 million bales, according to estimates from the U.S. Department of Agriculture. Stockpiles at warehouses monitored by ICE fell 80 percent in the past year through May 1 to near the lowest levels since April. A bale weighs 480 pounds.

"This terrible weather in the Southeast" is driving prices up, Keith Brown, president of Keith Brown & Co. in Moultrie, Ga., said in a telephone interview. "Since there's already tightness of high-quality cotton, this is going to make it even worse."

Two rivers in South Carolina have not yet crested so there may be additional crop damage, J. Michael Quinn, president of Carolinas Cotton Growers Cooperative Inc., said in a telephone interview from Garner, N.C. More precise numbers on losses won't be available for a few days until waters recede and farmers can go back in the fields, he said.

In other markets, raw sugar for March delivery rose 0.8 percent to 13.64 cents a pound on ICE Futures in New York after touching 13.67 cents, the highest since March 2. Arabica coffee for December delivery climbed 2.6 percent to $1.2755 a pound, and orange juice for November delivery added 0.9 percent to $1.063 a pound, the first gain since Sept. 16.

Business on 10/06/2015

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