• Linkdin
Maximize your media exposure with Fibre2Fashion's single PR package  |   Know More

New York cotton futures slip

05 Nov '11
4 min read

With the more than ample supply in the US as well as in the global marketplace, it is becoming more difficult for the futures market to justify an inverted price structure on the board. This is why the Dec/March inversion has been fading away, closing today at just 32 points. We believe that the futures market is in the process of rebuilding carry all the way out to July 2012 and possibly beyond.

As we have stated before, the fact that the certified stock is accumulating high grade/short staple cotton will help to force the issue, because we can't imagine that any merchant would be interested in owning 40'000 bales of certified stock at today's price unless there is an incentive in the form of carry.

So where do we go from here? All that these wild gyrations over the last couple of weeks have achieved is to expand the trading range slightly. Since September 21st the spot month has been confined to a range of just 857 points, between 96.47 and 105.05 cents. Although the fast arrival of the Northern Hemisphere crops and the generally weak tone in the physical market may argue for lower prices, strong buying by the Chinese Reserve has so far managed to keep the bears at bay.

The relatively large amount of unfixed on-call sales in December, which at 2 million bales amounted to about 25% of open interest last week, is another element of support. Then there are cotton's competitors for acreage, which are still holding up quite well with soybeans at 12.20 dollars and corn at 6.50 dollars per bushel. We should therefore see a continuation of the current sideways trend, albeit with a slight bias to the downside.

Plexus Cotton Limited

Leave your Comments

Esteemed Clients

TÜYAP IHTISAS FUARLARI A.S.
Tradewind International Servicing
Thermore (Far East) Ltd.
The LYCRA Company Singapore  Pte. Ltd
Thai Trade Center
Thai Acrylic Fibre Company Limited
TEXVALLEY MARKET LIMITED
TESTEX AG, Swiss Textile Testing Institute
Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)
Taiwan Textile Federation (TTF)
SUZHOU TUE HI-TECH NONWOVEN MACHINERY CO.,LTD
Stahl Holdings B.V.,
Advanced Search