Home / Knowledge / News / Textiles / NY cotton futures display mixed reactions this week
NY cotton futures display mixed reactions this week
16
Jun '12
Plexus Cotton Limited reported that New York (NY) futures had a mixed performance this week, as July rallied 420 points to close at 78.09 cents (78.80 synthetically), while December dropped 168 points to close at 70.60 cents.

A surprisingly large US export sales report of slightly over 1.0 million bales for both marketing years sent July shorts running for the exit this morning, which resulted in the spot month being locked the limit.

Since making a low of 66.10 cents on June 4, July has rallied an impressive 12 cents in just eight sessions. Short options positions - this time it was short call options – added further fuel to the fire. Before today’s session, with just two days to go until expiration, there were 16’818 call options open with a strike price of 81 cents or lower, which had a combined delta of 7’710 contracts. In other words, this position has the potential to generate an additional 9’000 contracts by tomorrow.

Most traders are quick to dismiss the market’s recent strength as nothing more than a temporary short-covering rally that’s confined to the July contract. The market is convinced that as soon as July goes off the board, new crop’s bearish forces will resume control.

Tuesday’s USDA supply/demand report has reaffirmed this belief, as global ending stocks in 2012/13 are projected to rise by another 0.76 million bales to an unprecedented 74.51 million bales. Although such a large ending stocks number is certainly a convincing argument for a bearish case, we believe that the situation is not quite as simple as it looks.

About a year ago, in early June 2011, the Chinese market and the international market were still sitting at around the same level, with both the CC-index and the A-index measuring a little over 170 cents/lb. Since then these two benchmarks have opened up a huge gap between them, with government sponsored Chinese prices still hovering north of 130 cents/lb, while the A-index is around 50 cents/lb cheaper than that. Therefore, when reaching conclusions about the USDA report, we need to take this two-tiered market into account.

Analyzing the latest USDA report from a Chinese versus a rest-of-the world perspective, the numbers look rather bearish for China but are actually quite supportive for the rest-of-the-world. While China is expected to see its ending stocks rise by 3.25 million bales at the end of next season, inventories in the rest-of-the-world are projected to fall by 2.5 million bales.

Of the expected 25.0 million bales rise in global ending stocks since 2010/11, 20.0 million bales are added in China and just 5.0 million bales in the rest-of-the-world. A 5.0 million bales increase in ending stocks outside China doesn’t look like an overly depressing number to us.

We feel that for proper price analysis we need to look at the world in three parts – China, the US and everyone else. China runs its own game with domestic prices in the stratosphere compared the international level and we should therefore primarily focus on China’s net imports of raw cotton and yarn.


Must ReadView All

Global economic upswing became broader & stronger: IMF

Textiles | On 19th Apr 2018

Global economic upswing became broader & stronger: IMF

The global economic upswing that began around mid-2016 has become...

Courtesy: ITMA

Textiles | On 19th Apr 2018

ITMA 2019 expanding space due to overwhelming response

Due to overwhelming response, the exhibition space has been increased ...

BIDA’s Europe trip to showcase a different Bangladesh

Apparel/Garments | On 19th Apr 2018

BIDA’s Europe trip to showcase a different Bangladesh

The Bangladesh Investment Development Authority (BIDA) is taking a...

Interviews View All

Prabu Mohanram
Balavigna Weaving Mills Pvt Ltd

The biggest challenge that the weaving industry faces is high price

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Smita Murarka
Amanté

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

Urmil Arya

Sushila International, a well established textile organisation established ...

Harsh Shah

Fynd is the central online shopping destination for fashion, offering...

Sandip Bhojani, Manthan Patel

Krypthm Tradelink LLP is a Surat-based manufacturer of westernwear....

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Iago Castro Asensio
RCfil Distribuciones S.L.

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

Kerem Durdag
Biovation II LLC

Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...

Wendell Rodricks
Wendell Rodricks

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

Sonam & Paras Modi
SVA

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

Sidharth Sinha
Sidharth Sinha

<b>Sidharth Sinha</b> has contributed to the successful rebirth and...

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