Largest-Ever Cotton Sale Already Affecting Market
MEMPHIS, Tenn. (AP) _ A cotton sale billed as the largest ever comes at a time when cotton supplies worldwide already are tight, industry observers said Wednesday.
The sale of 500,000 bales to China was announced Tuesday by Dunavant Enterprises Inc. of Memphis.
The U.S. cotton industry expects total sales of 15 million bales between Aug. 1, 1990, and July 1991. Of that total, sales abroad are projected at 6.8 million bales.
The Dunavant sale is the largest single cotton deal on record, topping a 1984 sale when China bought 484,000 bales from Cargill Inc., according to the National Cotton Council.
The Dunavant sale, expected to be worth $200 million, was negotiated over the past several weeks by representatives of Dunavant Enterprises and Chinatex Cotton Import & Export Corp. of Beijing.
Even before the sale was finished, the U.S. cotton market was reacting to speculation of a major deal in the works, said Dean Ethridge, a vice president of Sparks Commodities Inc. of Memphis.
″This has been talked about for weeks. I think to the extent that anyone is surprised, it is to the size of the sale,″ he said.
Cotton prices on spot and futures markets hovered around 75 cents a pound in the days just prior to the sale. Prices were under 72 a pound on Oct. 1.
The Dunavant deal will add to market pressures expected to keep cotton prices strong for the next nine months, Ethridge said.