Home / Knowledge / News / News Detail
NY cotton futures rebound this week
17
Nov '12
Plexus Cotton Limited reported that New York (NY) futures rebounded this week, as March gained 190 points to close at 72.24 cents.

With crops in the Northern Hemisphere coming off the field at a rapid pace and with the USDA issuing yet another bearish supply/demand report last Friday, most traders were expecting the market to remain on the defensive this week. However, China once again came to the rescue by buying a large amount of imports over the last few days, with US cotton leading the way.

The “whisper number” has recent sales to China at over a million bales, as the Reserve seems to be intent on bringing down the average cost of its massive stockpile by importing much cheaper international cotton. In doing so, China is not only helping to offset any crop pressure that was about to build in the US, but it has caught many traders off guard, particularly speculators.

When we look at the latest CFTC spec/hedge report as of November 6, we notice that large and small speculators sold 19’865 contracts or nearly 2.0 million bales net during that week, in addition to having sold 11’563 contracts or 1.15 million bales the week before. In other words, speculators have recently sold over three million bales net at prices in the low 70’s, while the trade was on the other side as a net buyer. This is an almost identical set up like month ago, when a similar spec short position triggered a short-covering rally towards 78 cents.

Last Friday the USDA continued its string of bearish reports by raising its estimate of global ending stocks to 80.3 million bales. Although at first glance such a high inventory number may look depressing, the story is not quite as simple as it seems, because these 80 million bales have a wide range of prices. The 37.1 million bales of Chinese inventory are nearly twice as expensive as other sizeable stockpiles around the globe, which can be found in origins like Brazil, the US or India. In other words, while Chinese stocks loom large, they are not necessarily a threat on the trade front.

Quite the opposite is the case! Because Chinese cotton is so expensive, it has led to an absurd situation in which Chinese mills, as well as the Reserve, are desperately trying to import cotton, yarn and grey fabrics in an effort to stay competitive or to average down cost, which leads to an even greater dichotomy between China and the rest of the world.

On the one hand we have China boosting inventories to never before seen levels, while its textile industry is becoming less competitive, and on the other hand we have still relatively tight stock levels in the rest of the world, at a time when mill demand is seeing a revival. For example, in 2009/10 we had ending stocks outside China at 32.5 million bales; in 2010/11 they were at 38.1 million bales and in the 2011/12-season that just ended they amounted to 39.4 million bales. During the course of this season stocks outside China are expected to increase to a comfortable 43.2 million bales according to the USDA, assuming that China doesn’t import more than 11.0 million bales. However, not only do we believe that Chinese imports will exceed 11 million bales, but we also feel that demand in the ROW is understated by several million bales, meaning that stock levels could very well remain below 40 million bales.


Must ReadView All

Apparel/Garments | On 30th Apr 2016

Britain keen on new ventures in textiles and garment

British High Commissioner to India Sir Dominic Asquith, has said that ...

Apparel/Garments | On 30th Apr 2016

‘India’s apparel sector needs to revisit policies’

Apparel Export Promotion Council (AEPC)’s Additional Secretary...

Textiles | On 30th Apr 2016

Bangladesh spinners wary of another gas price hike

Bangladeshi cotton spinners have expressed concern that they may lose ...

Interviews View All

William R. Adler
True Fit

How is technology helping retailers to enhance the shopping experience of...

Christiane Thies
Thies GmbH & Co. KG

What is the current market scenario of fabric dyeing machines worldwide?...

Bhumika and Shyamal Shodhan
Shyamal and Bhumika

How is the market for bespoke and designer clothing in India ? How is the...

Mr. R. N. Doshi
Rajoo Engineers Limited

Mr. R. N. Doshi, co-founder of the Rajoo Group - Excellence in Extrusion,...

Larry L Kinn
Suominen Corporation

<b><i>Larry L Kinn, Senior Vice President - Operations Americas of...

Dr Geoff Collins
Lenzing Fibers (Hong Kong) Ltd

The Lenzing Group The Lenzing Group is an international group of...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
April 2016

F2F Magazine

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


<%@ language="VBScript" %>
feedback
We would love to hear from you about your experience using the new interface. A quick review of yours would help us give you a better experience.
Advanced Search