Home / Knowledge / News / Textiles / NY cotton market under pressure
NY cotton market under pressure
12
Aug '11
NY futures came under pressure this week, with December dropping 842 points to close at 96.52 cents. The cotton market was facing a lot of headwinds this week, be it from the scary rollercoaster ride we saw in the financial markets or the surprisingly bearish USDA report of this morning. However, considering the circumstances, cotton has held up relatively well so far, which we attribute to the fact that the trade has already sold plenty of US cotton short, both in the physical market as well as in New York, which limits additional selling.

The USDA Supply/Demand report came in mostly as expected, with the exception of US crop production, which was raised by 550'000 bales from last month to 16.55 million bales. Harvested acres went up slightly to 9.67 million and yield was increased from 800 to 822 pounds per acre, which accounted for the increased production estimate. This 16.55 million bales number was received with disbelief by the trade, because it was around 1.3 million bales above the consensus.

Could we have become too negative on the US crop? Only time will tell, but the Texas crop has definitely suffered a lot of damage this season and we therefore feel that the 4.5 million bales estimate for Texas is much too optimistic. Not only has the dryland crop been canceled out, but also irrigated acreage looks uneven at best, with a certain percentage either being abandoned or producing dismal yields.

The crops in the Mid-South and Southeast are doing a lot better, but we believe that the next 4-6 weeks would have to be perfect in order to make the USDA estimate for these two regions. Overall we doubt that the US is on track to make a 16.55 million bales crop and believe that this estimate is at least a million bales too high.

Other notable changes in the USDA report included a drop in the Brazilian crop from 9.3 to 8.7 million bales and some smaller reductions of 0.2 million bales each in West Africa and the CIS, which together more than offset the increase in the US and reduced global production from 123.16 to 122.71 million bales. However, this relatively small drop in output was overshadowed by another sizeable cut in global mill use for 2011/12 to just 115.18 million bales, 1.57 million bales less than last month's estimate.

Demand destruction has been the main driver behind the historic price collapse we have witnessed in recent months, as mill use for the 2010/11-season has been reduced by roughly 7 million bales since last August, from 120.87 to 113.93 million bales. While there is no doubt that demand has suffered after prices nearly tripled in a matter of just seven months and mills either reduced production or switched to other fibers, we would not be surprised if the current demand estimate would prove to be too low a few months from now.

Despite economic weakness in the US and Europe, global fiber demand is still growing and cotton is likely to make a comeback now that prices are once again more manageable for the various segments of the supply chain. Common sense tells us that today's mill use should not be lower than it was six years ago, when 116.8 million bales were consumed. China, India and many other emerging markets have been growing leaps and bounds since then and even in the US and Europe retail sales statistics don't justify the gloomy outlook for consumption beyond a short-term inventory readjustment.


Must ReadView All

Courtesy: Bangladesh Bank

Apparel/Garments | On 22nd May 2018

Bangladesh Bank enhances EDF loan limit to $25 million

Bangladesh Bank has enhanced the loan limit under Export Development...

Sri Lanka's textile imports up 32.5% in February 2018

Textiles | On 22nd May 2018

Sri Lanka's textile imports up 32.5% in February 2018

In what might be an indication of higher exports in the coming...

Provide power at Rs 8/kWh to textile units: APTMA

Textiles | On 22nd May 2018

Provide power at Rs 8/kWh to textile units: APTMA

All Pakistan Textile Mills Association (APTMA) has asked the...

Interviews View All

Ajay Ghariwala
Luthra Group

We are ready to adopt or follow every opportunity

Yash Maniyar
Rekha Maniyar

Indian fashion market is growing at a staggering rate

Spokesperson
Hugo Boss

'Hugo Boss works with carefully selected sourcing partners'

Rajat Jaipuria

Activewear brand Soul Space promotes organic cotton farming and...

Rikesh Mistry

Jupiter Comtex Pvt Ltd, established in 1973, started its textile machinery ...

Harmeet Singh

New Delhi-based Jogindra Industries Private Limited provides an assortment ...

Paolo Ocleppo
Sandvik Hyperion

Paolo Ocleppo, Rotary Cutting Segment manager, Sandvik Hyperion discusses...

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Igor Chapurin
Chapurin

"Now we can see the Russian trend in international fashion. And Russian...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

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

Leave your Comments


May 2018

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

news category


Related Categories:

Advanced Search