Cotton Futures Prices Rally

Cotton futures prices rallied Wednesday on the Cotton Exchange in New York, partly on concern that a storm in the Gulf of Mexico might move inland and damage part of the cotton crop.

Hurricane Danny, packing gusts up to 92 mph, Wednesday evening became the season’s third hurricane, churning north across the Gulf of Mexico. Danny reached hurricane status just before 6 p.m. EDT when its maximum sustained winds reached 75 mph.

Analysts noted that the cotton crop is in a vulnerable period in which the bolls are opening and can be blown off the plant.

However, Ernest Simon, a cotton analyst with Prudential-Bache Securities, said the weather was less of a factor than a report on traders’ positions.

He said the report disclosed that 91% of the speculators in the market think that prices are likely to fall. The figure prompted buying because it indicated that anybody who wants to sell cotton probably already has. As a result, Simon said, there will be heavy buying by those traders if prices show signs of rallying.

Grain and soybean futures prices were higher on the Chicago Board of Trade.