Cotton prices rise as poor rains threaten output in US, India

August rainfall in the Mississippi Delta region, from southeast Missouri to Louisiana and east-central Texas, will be half the normal amount and temperatures will be above average, said Dale Mohler, a senior meteorologist with AccuWeather.com. Farmers in India have planted less cotton than last year, the nation's farm ministry said in New Delhi.

"Weather is friendly and the planting in India is friendly to prices," said Rogers Varner, the president of Varner Bros of Cleveland, Mississippi.

Weather conditions next month may cause a "significant reduction'' in the harvest this fall, Mohler said. "I can see production off 10 to 15 per cent in the two areas combined," he said.

Hot weather will cause cotton to lose moisture faster than it gains, Mohler said. Without adequate rainfall, plants will go into a protective mode, slowing growth rates, he said.

Indian monsoon

India's monsoon, which accounts for four-fifths of the nation's annual rainfall, was below average for a second week, New Delhi-based India Meteorological Department said. Farmers have planted 5.8 million hectares (14.3 million acres) with cotton as of Friday, down 17 per cent from a year ago, the farm ministry said.

The crop in east-central Texas, which contributes a third of the state's cotton output, has been stressed by lack of rainfall since the beginning of June, Mohler said.

"The cotton crop there is not doing well and that's a problem,'' Mohler said. Texas is the largest US cotton- producing state. China is the world's largest cotton grower.

A slump by other agricultural commodities limited the gains in cotton, which earlier fell as much as 0.8 per cent. Corn dropped to the lowest in seven weeks, soybeans fell for the fourth time this week, and wheat reached a six-week low.