Sep 29, 2021 - Economy

Short squeeze hits cotton

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

Cotton is getting a lot more expensive.

Driving the news: Futures contracts shot up this month as heavy rains in Texas and the Mississippi Delta endanger the cotton crop — catching traders with short positions by surprise and setting off a short squeeze, Bloomberg reports.

Why it matters: The cost to produce clothing is on the rise, which apparel makers and retailers may look to pass on to consumers.

Details: The U.S. is the largest cotton exporter, and worldwide demand has been increasing, according to Bloomberg.

  • Shipping constraints are also contributing to the price rally.

What to watch: Prices may rise further amid more short covering of large outstanding positions, the report says.

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