Dec. 15 (Bloomberg) --Cotton futures in New York declined for the first time in six days on speculation that a rally to a one-month high may reduce demand for the fiber and increase planting acreage in the U.S., the world’s biggest supplier. Cotton for March delivery lost 1.3 percent to $1.4255 a pound on ICE Futures U.S. in New York at 12:29 p.m. Tokyo time. The contract climbed to as much as $1.4597 yesterday, the highest since Nov. 10. “Current higher prices may slow purchases by overseas importers and encourage U.S. farmers to increase crop acreage,” Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said by phone from Tokyo. “It might be sales to take profits, as the current tight supply situation may last for a while.” Cotton acreage may increase at least 10 percent in the southwest region of the U.S., according to John Robinson, a professor and extension economist at Texas A&M University in College Station. Texas is the largest cotton-producing state. “Between high prices and the impact of going into a dry year, it’s going to reinforce the effect of planting more cotton in Texas,” Robinson said yesterday on a conference call organized by Ag Market Network. “We’ll see cotton acres, particularly on dry land, coming in place of either sorghum or failed wheat acreage. As long as it stays dry, it’s going to reinforce it. It pays to plant cotton under those conditions.” Dwindling Stockpiles Cotton prices have surged 89 percent this year, heading for the biggest annual gain since 1973. The fiber reached a record $1.5195 a pound on Nov. 10 on signs that growers would struggle to meet mounting demand from China, the world’s biggest consumer. U.S. stockpiles for the year ending July 31 will total 1.9 million bales, the lowest projected level since May 1996, when Bloomberg data begins, the Department of Agriculture said Dec. 10. That’s 14 percent lower than the agency’s November estimate. Inventories held in warehouses monitored by ICE expanded to 116,695 bales as of Dec. 13, from 114,876 bales the previous day. Stockpiles have plunged 72 percent this year. A bale weighs about 480 pounds, or 218 kilograms. Cotton for September delivery declined as much as 2.1 percent from the previous settlement to 27,450 yuan ($4,123) http://www.bloomberg.com/news/2010-12-15/cotton-declines-as-surging-prices-may-slow-demand-boost-planting-in-u-s-.htmla ton before trading at 27,585 yuan on the Zhengzhou Commodity Exchange at 11:12 a.m. local time. Demand in China is forecast to outpace supply by 17 million bales in the year ending July 31, according to the USDA. To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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