Home / Knowledge / News / Textiles / NY cotton futures came under light pressure this week
NY cotton futures came under light pressure this week
12
Oct '12
Plexus Cotton Limited reported that New York (NY) futures came under light pressure this week, as December dropped 138 points to close at 70.71 cents.

The market is a bit of an enigma at the moment, because there seems to be a disconnect between perception and reality. Although most analysts and commentators still have a rather negative outlook on cotton prices based on a statistical picture that sees global ending stocks rise to a massive 79 million bales, the market is acting remarkably resilient.

What caught our attention in this regard was the latest CFTC spec/hedge report, which showed continued strong trade buying and short covering in the week that ended on October 2nd. The trade bought nearly 15’000 contracts net futures and options during that week, while large and small speculators took the other side.

If we combine that with the 10’998 lots that the trade bought the week before, it amounts to nearly 2.6 million bales in net purchases. Why was the trade such a strong buyer of futures and options into this price decline, at a time when we typically see a lot of hedge selling as crops are coming in? Some feel that quality concerns prompted traders to cover shorts in the futures market, while others suspect that a large sale to China might be the reason behind it.

Looking at the latest USDA classing data, there is definitely some cause for concern, since the first 1.63 million bales of new crop yielded just 46.5 percent in tenderable grades. There seems to be an unusually high percentage of high micronaire cotton all the way from South Texas to the Southeast, with classing offices from Corpus Christi, TX to Florence, SC reporting micronaire averages between 4.8 and 5.0. This means that out of 728’000 bales classed in Corpus Christi just 49.6 percent are tenderable, while the first 334’000 bales classed in Memphis yielded only 38.7 percent.

West Texas seems to be a different story, based on the small amount of 6’000 bales that has been classed in Lubbock so far. While the micronaire is mostly in the tenderable range with a 4.1 average, the problem there is staple, as 44.7 percent is shorter than 1.1/32. Although it is still early with only about 10 percent of the US Upland crop classed so far, it looks like the extreme heat and drought this summer have taken a toll on fiber characteristics. We believe that this low percentage of tenderable grades has traders nervous, which may be at least part of the reason for all this trade short covering we have seen in recent weeks.

This morning the USDA released its latest supply/demand estimate and it wasn’t pretty! Global stocks are now expected to rise to 79.1 million bales at the end of this season, which would be 9.5 million bales more than last season, 30.5 million more than in 2010/11 and 32.3 million bales more than in 2009/10. The only thing that keeps these stocks from pressuring prices more than they already have is the fact that most of this stock accumulation is happening in China. Of the 32.3 million bales in added stocks over the last three seasons, 26.0 million bales belong to China and just 6.3 million bales to the rest of the world.


Must ReadView All

GMAC urges Cambodia to push fabric-forward rule in RCEP

Apparel/Garments | On 17th Oct 2017

GMAC urges Cambodia to push fabric-forward rule in RCEP

Representatives from the Garment Manufacturers Association of...

Alibaba to invest $15 billion in DAMO Academy for research

Textiles | On 17th Oct 2017

Alibaba to invest $15 billion in DAMO Academy for research

Alibaba will invest $15 billion over the next several years in its...

Pressure on  Indian textiles exporters to ease by Q3: ICRA

Textiles | On 17th Oct 2017

Pressure on Indian textiles exporters to ease by Q3: ICRA

Pressures on the profit and debt levels of textiles exporters is...

Interviews View All

Amardeep Singh
Orient Craft

'In export markets, the trend in terms of embroidery, is towards matte...

Sachin Sharma
Gem Enviro Management Pvt Ltd

There are no significant differences between virgin yarn and PET recycled...

Yash Agarwal
Hitansh Online

Every market region has its own culture and trends

Hardik Sanghvi

Idealin Fogging Systems has been engaged in designing and manufacturing...

Ravindra Jain, Ashish Baid

Oswal Prints Private Limited has been manufacturing and exporting ethnic...

Harmeet Singh

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

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Aditi Somani
Aditi Somani

Aditi Somani specialises in luxury fusion wear with international cuts and ...

Sonam & Paras Modi
SVA

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

Akta Adani
India Boulevard

India Boulevard is a San Francisco-based curated fashion marketplace 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

October 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
76.9%
No
13.8%
Skip
9.2%

Total Votes: 65

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
61.5%
No
27.7%
Skip
10.8%

Total Votes: 65

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
84.6%
No
10.8%
Skip
4.6%

Total Votes: 65

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
73.8%
No
12.3%
Skip
13.8%

Total Votes: 65


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