Across the world, cotton markets have soared reflecting a burst of speculative buying sparked by concerns about smaller stockpiles. ICE October cotton leapt as much as 5.6 per cent to 75.14 cents a pound on Wednesday, the highest price in two years. Open interest, or the number of contracts outstanding, in the US cotton futures market has grown by 11.5 per cent this week, reflecting an influx of new buyers.

Cotton had been one of the slowest commodity markets in recent years, with prices hovering in a narrow range. That abruptly changed this week, with ICE futures locking at price fluctuation limits on Tuesday and Wednesday.

Meanwhile, one trigger was the release of supply estimates by the US Department of Agriculture. The agency estimated global stockpiles would drop 9m bales on year to 91.29m bales by July 2017, 3.4m lower than its previous estimate on increasing Chinese demand. A cotton bale weighs about 500lb.

China’s textile mills sector makes the country the world’s largest cotton consumer. The cotton market has for years been capped by uncertainty over a bloated Chinese state reserve built up under a price support programme for farmers. This year, sales from the reserve have been ‘very strong’ with the base sale price reaching nearly 90 cents a pound, suggesting ‘demand is more broadly-based than previously considered,’ USDA said.

India, the largest cotton producer, has been importing bales to replenish supplies after exporting heavily last year. Cotton farmers in India have also been battling a damaging pest called whitefly.