The U.S. Department of Agriculture reported Thursday that cancellations of cotton-export orders outnumbered new sales for the first time since June 2012.
The cancellations signal weaker demand for cotton for the worldas largest exporter of the fiber amid high prices.
Cotton futures prices are up 5.2% this year after U.S. growers harvested their smallest crop in four years. Prices have only recently retreated from the more than two-year high of 94.11 cents a pound reached on March 25.
High prices in the U.S. have likely encouraged textile mills to buy from places where cotton is less expensive, said Jordan Lea, co-owner of Eastern Trading Co., a cotton merchant in Greenville, S.C.
In the week ended April 3, net cancellations totaled 10,900 bales, as buyers in Thailand, Mexico, Bangladesh and Indonesia backed out of orders, outpacing orders from Turkey, China and Colombia.
Cotton futures traded above 90 cents a pound that week but settled at a more than one-month low Thursday of 89.02 cents a pound.
aEverybody is sort of on edge,a Mr. Lea said, referring to the run-up in prices. aAt these price levels weare rationing demand.a
Dozens of mills cancelled orders of cotton in 2011 and 2012, after prices rallied above $2 a pound to a post-Civil War high and then tumbled. The price swings hit balance sheets at some of the worldas largest cotton merchants, such as Olam International, Noble Group and Glencore.
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