Cotton prices slumped and are on the way to the longest drop in a year on U.S. government reports that have sparked concerns about the economic recovery.
The economy grew less than forecast in Q1 and unemployment insurance claims were up last week, according to separate reports. Cotton’s slide started May 20th on concerns that demand will fall in China, which is the world’s largest consumer of cotton. The price has also been affected by falling estimates for economic expansion.
Sharon Johnson, a senior cotton specialist at Knight Futures in Roswell, Georgia, told Bloomberg, “Since cotton is a little more sensitive to what’s going on economically, that might explain why it’s down.”
Cotton for delivery in July fell 1 percent to 79.92 cents per pound – it’s the eighth straight session with falling prices. Cotton briefly touched 79.87 cents, which would be the lowest price for an active contract since January 23rd. It is on track for its biggest monthly drop in a year.