In the Texas panhandle, the center of U.S. cotton country, it wasn’t just higher prices and a lingering drought that influenced Dee Vaughan’s crop plans for his 7,000-acre (2,800-hectare) farm. It was corn.
China is hoarding a record amount of cotton to aid farmers as global production exceeds demand for a fourth consecutive year, increasing the risk of a supply surge that would tip prices into a bear market.
Cotton futures tumbled to a 31-month low on signs that a slowing world economy will expand a surplus of the fiber, reducing costs for clothing retailers including J. Crew Group Inc. and American Eagle Outfitters Inc.
Global cotton stockpiles next year will be 7 percent bigger than estimated in July and the largest ever as India’s crop improves and demand grows more slowly that expected, the International Cotton Advisory Committee said.