Cotton jumped to the highest price since reaching a record last month on signs that global output will fail to keep pace with rising demand in China, the world’s biggest buyer. China’s General Administration of Customs said today that imports jumped by 86 percent in 2010 from a year earlier. Global inventories for the year that began Aug. 1 will be the tightest since the 1995-1996 season, Luke Mathews, an agricultural commodities strategist at Commonwealth Bank of Australia, wrote in a report. Prices have more than doubled in the past year. “There is a huge shortage of supplies,” said Peter Egli, the director of risk management in Chicago at Plexus Cotton Ltd., a U.K.-based merchant. “There is also some short-covering in the market.” Cotton for March delivery surged by the maximum allowed on ICE Futures U.S. for the third day in four. The contract rose the 4-cent limit, or 2.6 percent, to $1.5694 a pound to settle at 2:30 p.m. in New York. That price is the highest since Dec. 21, when futures jumped to a record $1.5912. The most-active contract advanced 11 percent this week, the most since Dec. 3. In the week ended Jan. 13, U.S. shipments of upland cotton jumped 36 percent from a week earlier to 444,268 bales, the Department of Agriculture said today. “This kind of number certainly supports the higher prices,” Egli said. The global ratio of stockpiles to use is forecast at less than 37 percent this season, the lowest since 1993-1994, according to the Commonwealth Bank report. China, which consumes 40 percent of the world’s cotton and accounts for 40 percent of global import demand, increased raw-cotton imports 38 percent in 2010-2011, according to the report. To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Debarati Roy in Mumbai at droy5@bloomberg.net To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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