Home / Knowledge / News / Textiles / NY cotton futures displays mixed performance
NY cotton futures displays mixed performance
02
Jun '12
Plexus Cotton Limited reported that New York (NY) futures had a mixed performance this week, as July dropped another 239 points to close at 71.55 cents, while December was down just 32 points to close at 70.35 cents.

After losing around 24 percent of its value in just 22 sessions, averaging losses of 100 points per day, the cotton market seems to finally be regaining its footing.

We believe that the market's plunge was caused by a combination of the following factors:
a) Grower hedging, mostly via bearish options strategies;
b) a large short put position by the trade, which led to a rapidly increasing delta long position in a falling market and forced traders to play defense;
c) A deteriorating chart picture, which invited spec selling, especially when the market broke through long-term support near 83 cents and
d) Money managers once again moving to a “risk off” position in commodities.

The above factors combined to a 'perfect storm' of selling, while buyers were nowhere to be seen, which created a vacuum underneath the market. However, once the market approached the 70 cents level, the equilibrium got restored, as sellers were either less inclined to sell or had no more reason to, while bottom pickers started to look for bargains.

Although there has been some out of the money put buying this week, growers are generally not chasing prices below 70 cents at the moment. The trade, which got caught on the wrong foot when the market fell through its short put position, has already taken most of the hit since there aren't many puts left to defend against below 70 cents.

Short speculators, who got rewarded nicely by this selloff, are not likely to add to their shorts in an oversold market and are probably focusing on protecting their profits instead. Even the “risk off” trade may come to an end soon, as members of the Fed are already hinting at additional stimulus to combat the prevailing doomsday mood.

Cotton held up relatively well during this “Chicken Little” week, where the sky seemed to be falling on just about everything else. The fear factor is rising and fund managers are taking all kinds of bets off the table, parking their money in government bonds.

Today the 10-year US Treasury bond yield reached an all-time low of 1.5309% and German, French, Dutch, Canadian and Australian bond yields also declined to record lows. It is quite absurd to see yields drop to record lows at a time when government debt is reaching all-time highs.

Total US government debt amounts to USD 15.8 trillion today, which is more than three times as much as it was in the year 2000.

We believe that this fear surrounding the Euro crisis is a bit overdone and it reminds us of the hype ahead of Y2K. With traders all over the globe deleveraging ahead of a potentially cataclysmic event in Europe, it may eventually turn into a 'sell the rumor, buy the fact' situation.


Must ReadView All

Textiles | On 22nd Aug 2017

Cotton yarn futures trading begins in China’s Zhengzhou

Cotton yarn futures trading recently began on the Zhengzhou Commodity ...

Textiles | On 22nd Aug 2017

PTEA concerned over sluggish textile sector growth

The Pakistan Textile Exporters Association (PTEA) has expressed...

Textiles | On 22nd Aug 2017

Asian Propylene prices march higher last week

Propylene prices went up in Asia in the last week due to tight supply ...

Interviews View All

Smita Murarka
Amanté

‘There is huge demand in the Indian lingerie market for non-wired styles.’

Vidhyaa Shankar. S
A Ganapathi Chettiar

'The usage of knits is getting into the boundaries of woven fabrics'

Karel Williams
Dow Microbial Control

'Silvadur is most rapidly adopted in areas where hygiene-conscious and...

Marcel Alberts
Eurofibers

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

Lynda Kelly
Suominen Corporation

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

Kevin Nelson
TissueGen

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Karan Arora
Karan Arora

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

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

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

August 2017

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
67.7%
No
16.1%
Skip
16.1%

Total Votes: 31

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
45.2%
No
35.5%
Skip
19.4%

Total Votes: 31

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
83.9%
No
6.5%
Skip
9.7%

Total Votes: 31

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
61.3%
No
9.7%
Skip
29.0%

Total Votes: 31


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