Home / Knowledge / News / Textiles / Quite increase in New York cotton futures
Quite increase in New York cotton futures
03
Dec '11
Plexus Cotton Limited reports that NY futures have moved considerably lower since our last report on November 17, with March dropping 518 points to close at 91.30 cents.

The bearish wave, which has been gathering momentum in recent weeks, became potent enough to breach the "Chinese Wall" of support, taking prices to new 14-month lows. The move was all the more impressive since it happened in the face of very strong US export sales, totaling more than 2.5 million statistical bales over a 3-week period. But as the old saying goes - "it's not the news itself that matters, but how the market reacts to the news"!

Interestingly, it was the speculators that were responsible for the selling, as they either bailed out of long positions or added new shorts in reaction to a technical breakdown in cotton and all the uncertainty surrounding the sovereign debt crisis. In the week of November 22, during which the market dropped 10 cents in just three days, large and small speculators sold 11'386 contracts net, while the trade (+10'707 contracts) and index funds (+679 contracts) were net buyers.

After three weeks of stellar numbers, the US export sales report of this morning reflected a more routine course of business during Thanksgiving week, with Upland and Pima sales increasing by just 84'100 running bales net for the current marketing year, while another 19'000 bales were sold for 2012/13.

Although net sales are still growing thanks to China, it is troubling to see that another 35'900 running bales were cancelled in eight different markets, led by Pakistan, Turkey and South Korea. The pace of shipments is also a negative, as just 163'400 running bales were exported last week, bringing the total for the season to 1.85 million statistical bales so far, the slowest pace since 2000. The backlog of outstanding orders now amounts to over 8.6 million statistical bales.

When we look at the current US balance sheet, we have supply for the season at 18.9 million statistical bales (2.6 beginning stocks plus 16.3 crop). From that we need to subtract 10.5 million in export sales (not counting the 1.3 million in 'optional sales) and 3.8 million bales for domestic mill use, which leaves around 4.6 million bales for sale. Although the US is by far in the best shape among exporters, it doesn't mean that holders of unsold US cotton feel less of an urgency to get rid of their remaining bales.

Given that there is no carry in the market all the way out to December 2012 and considering the fierce competition from other origins, holding out for higher prices may not be a winning strategy this season, unless one were to believe that the market will rally enough to pay for the carrying charges.

Fortunately there is the Chinese Reserve, who has been taking a huge load off exporters' and domestic suppliers' shoulders over the last six weeks and who is expected to continue to buy a lot more in the months ahead. As of the Chinese Reserve has procured over 5.0 million statistical bales in the domestic market and probably at least 4.0 million bales in the international market. By absorbing the world's production surplus into its stocks, the Chinese Reserve is acting as a counterforce to the extreme volatility we have seen in the cotton market since the summer of 2010.


Must ReadView All

ITC, ICS tie up to help Moroccan textile value chain

Textiles | On 21st Apr 2018

ITC, ICS tie up to help Moroccan textile value chain

The International Trade Centre (ITC) has partnered with ICS, which...

Bangladesh garment manufacturers call for fair pricing

Apparel/Garments | On 21st Apr 2018

Bangladesh garment manufacturers call for fair pricing

Bangladesh garment manufacturers want a ‘commensurate adjustment’ by...

Pak ministry proposes extension to PM package for 2018-19

Textiles | On 21st Apr 2018

Pak ministry proposes extension to PM package for 2018-19

Pakistani textile ministry has reportedly proposed extending the...

Interviews View All

Frank Gossmann
Rotorcraft AG

‘RT3 motto is: Do not check millimetres, check colours.’

Top executives
Fashion houses, India

With technology, it has become easier to ensure IPR

Shawn Honeycutt
Bolger & O'Hearn

‘The Indian market is interesting and rather persistent in seeking new...

Vikas Banduke

Softech Controls Private Limited (SCPL) is a part of the Cotmac Group, an...

Anupam Arya

<div>Jaipur-based Fabriclore Retailing Pvt. Ltd. is attempting to revive...

Abhishek Pachauri

Reckon Industries adapts latest systems for manufacturing from designing...

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

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


April 2018

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

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Active Poll

Do you see sustainability as a route to business growth?

Yes
69.9%
No
12.6%
Skip
17.5%

Total Votes: 103

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Active Poll

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes
63.1%
No
29.1%
Skip
7.8%

Total Votes: 103

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Active Poll

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes
87.4%
No
8.7%
Skip
3.9%

Total Votes: 103

Thanks for your valuable feedback. Claim your free latest sustainability e-book.

Active Poll

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes
82.5%
No
7.8%
Skip
9.7%

Total Votes: 103


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search