Cotton prices soared Monday after India banned exports of the fiber, which may send more buyers to the United States for supplies.
Cotton for May delivery rose 4 cents to finish at 92.23 cents per pound. It still is less than half what it was a year ago when shrinking global inventories and stronger demand sent prices over $2 per pound.
India, the world's second-largest exporter of cotton, said that it has halted new export sales of cotton and any cotton that has been sold but not shipped also will be held in the country, Penson/FCG analyst Sharon C. Johnson said.
There was no immediate word on how long the ban would last. It marked the second time in nearly two years that India has banned cotton exports.
The announcement came after India's sales to international merchants and textile mills have increased since November because of cheaper prices. Johnson speculated that textile mills in India have become concerned that supplies were shrinking and perhaps the remaining product is of lower quality.
Customers will have to go primarily to the U.S., Brazil, Uzbekistan or the African-French zone to buy cotton. "This is a game changer," Johnson said. "Pulling India out, at this point, is going to ship business our way and it also just cuts off however much more cotton that we thought was going to be available to the world."
The U.S. Agriculture Department has estimated that India would produce 27 million bales and export 6.25 million bales by the end of the 2011-2012 growing season. The U.S., the world's largest exporter, was predicted to produce 15.7 million bales and export 11 million bales. The agency's next report is due Friday.
Other commodities were mixed after China lowered its economic growth forecast to 7.5 percent from 8 percent, which emphasizes the government's focus on better, not necessarily faster economic growth.
Investors also worried that a bond swap in Greece would not draw enough private investors to allow Greece to get a second bailout funding package. Without a bailout, Greece could default on its debt later this month.
Gold for April delivery fell $5.90 to finish at $1,703.90 an ounce, May silver declined 83 cents to $33.695 an ounce, May copper fell 4.35 cents to $3.8595 per pound, April platinum fell 29.1 cents at $1,662.60 per ounce and June palladium declined $4.20 to finish at $712.55 per ounce.
In energy trading, oil prices rose because of tensions tied to Iran's nuclear program. Benchmark crude rose 2 cents to finish at $106.72 per barrel in New York.
Natural gas fell 13 cents to finish at $2.36 per 1,000 cubic feet, weighed down by weak demand during the mild winter. Heating oil rose 2 cents to end at $3.22 per gallon and gasoline futures fell about a cent to finish at $3.26 per gallon.
In May agricultural contracts, wheat fell 2.5 cents to finish at $6.72 per bushel, corn rose 5.75 cents to $6.6075 per bushel and soybeans ended down 8 cents to $13.25 per bushel.