Cotton Falls as India Resumes Exports; Orange-Juice Price Drops.

Cotton futures fell to a two-week low as India, the world’s second-largest grower, ended a six-month ban on exports by issuing permits for shipments of 1.75 million bales. Orange juice declined.

Louis Dreyfus Corp., the biggest cotton trader, was among 10 companies that won permits after the government resumed bookings Oct. 1, the textiles ministry said. India, the second- largest exporter, halted overseas sales in April to boost domestic supply. Cotton prices soared 30 percent over three months, touching a 15-year high, amid tight supplies.

“The pipeline shortage that existed up to now is going to get cancelled out,” said Peter Egli, the director of risk management in Chicago for Plexus Cotton Ltd., a U.K.-based merchant. “We’re going to have plenty of cotton for the time being.”

Cotton for December delivery fell 0.19 cent, or 0.2 percent, to settle at 97.83 cents a pound at 2:48 p.m. on ICE Futures U.S. in New York, after touching 95.31 cents, the lowest price for a most-active contract since Sept. 16. Last week, the commodity dropped 1.9 percent, the first decline in six weeks.

India still has export licenses available for 3.75 million bales for shipment beginning Nov. 1, the textiles ministry said.

World output is forecast to increase 16 percent to 25.2 million tons this season, compared with 21.8 million the year before, the International Cotton Advisory Committee said on Oct. 1.

‘Large Supply Response’

“During the 2010/11 crop year, a large supply response will begin to push prices lower,” JPMorgan Chase Bank NA said in a commodities report last week. “Toward the end of 2011, prices should fall back below 75 cents a pound.”

The U.S., the largest exporter, has had a good harvest, said Egli of Plexus Cotton. “The weather has been nearly perfect in most areas,” he said.

U.S. farmers collected 19 percent of the crop as of Sept. 26, compared with 8 percent a year earlier, according to the U.S. Department of Agriculture. Warm and sunny weather provided excellent harvest conditions in the Mississippi Delta growing region, the agency said in a report on Sept. 27. The USDA will provide an update later today.

Orange Juice Drops

Orange-juice futures fell for the second straight session as the dollar strengthened against the euro, eroding the appeal of raw materials priced in the U.S. currency.

“Across the board, commodity markets are weaker,” said Boyd Cruel, a senior analyst at Vision Financial Market in Chicago. “The dollar strength right now is pushing commodities lower.”

The dollar rose as much as 0.6 percent against a basket of six major currencies and is heading for the biggest gain since Sept. 15.

Orange-juice futures for November delivery declined 1 cent, or 0.6 percent, to settle at $1.5465 a pound at 2 p.m. on ICE. Earlier, the price fell as much as 1.3 percent to $1.5355 a pound. The commodity dropped 1.6 percent last week.

Source : businessweek.com