The cotton exchange traded note is moving out of a rut, with cotton futures experiencing their largest increase in three months, as winter rains dampen U.S. harvests.
The iPath Dow Jones-AIG Cotton Total Return Sub-Index ETN (NYSEArca: BAL) rose 1.7% Monday. BAL is still down 10.4% over the past three months and 1.5% lower year-to-date.
ICE Cotton futures were up 1.6% Monday, trading around $78.5 per pound.
In the U.S., the world’s largest exporter of cotton, Southeastern states will experience as much as 3 inches of rain Monday through Nov. 27, which could delay harvests and erode crop quality, reports Luzi Ann Javier for Bloomberg.
“We’re supposed to get pretty big rains over the next few days, and it’s causing some buying,” Jack Scoville, a vice president at Price Futures Group Inc., said in the article. The weather “could hurt some volume and certainly will hurt the harvest progress in the coming week.”
Nevertheless, cotton prices have languished on high output and diminished demand. Cotton futures in India, th e world’s second-largest producer, are expected to decline as the state-run Cotton Adivsory Board estimated India’s cotton output to reach a record 37.5 million bales this year, a 3% increase year-over-year, Reuters reports.