Cotton Futures Post Longest Run of Weekly Declines in 55 Years

Jul 25, 2014 3:20 pm ET

July 25 (Bloomberg) -- Cotton extended the longest slump in more than five decades on mounting signs that global demand will trail output, increasing the chance of lower costs for companies including the maker of Hanes underwear.

On ICE Futures U.S. in New York, the price of the fiber tumbled 3.5 percent this week, the 12th straight drop and the longest decline since July 1959, when Bloomberg data starts. Cotton for December delivery lost 1.1 percent today to settle at 65.35 cents a pound after touching 64.53 cents, the lowest since Oct. 13, 2009.

This year, cotton has tumbled 23 percent, the most among 22 raw materials in the Bloomberg Commodity Spot Index, on concern that harvests will exceed use for a fifth straight year. The International Monetary Fund yesterday cut its outlook for 2014 global economic growth as expansions weaken from China to the U.S. Hanesbrands Inc. Chief Financial Officer Richard Moss said on a conference call that he expects a “challenging consumer spending environment” to persist, even as the Winston Salem, North Carolina-based company raised profit forecasts.

“The main driver is worries over demand given the poor economic data we’re getting,” Erik Tatje, market strategist for RJO Futures in Chicago, said in a telephone interview. “We also have decent supplies in the U.S. and record world stockpiles. I don’t see any kind of bottom yet.”

The U.S. Department of Agriculture this month said global inventories next year will increase 5.1 percent from 2014, boosting its forecast from June.

In the season that starts Aug. 1, American farmers may collect 16.5 million bales, up from 12.91 million a year earlier, as a receding drought in Texas, the top producing state, boost prospects, the USDA projects.

A bale weighs 480 pounds, or 218 kilograms.