Home / Knowledge / News / Textiles / NY cotton futures rise slightly higher this week
NY cotton futures rise slightly higher this week
16
Feb '13
The market continued its correction and pulled back to a low of 80.05 cents in March and 81.35 cent in May, but there were plenty of buyers waiting to buy on dips. Volume was heavy all week long due to the Goldman roll, but overall open interest held up quite well considering that March is in liquidation, as it declined by only 9’520 lots overall.

While March open interest dropped by 61’670 contracts over the last five sessions, the rest of the board picked up 52’150 contracts, which tells us that specs longs and trade shorts continue to hold their line in this standoff.

According to the most recent CFTC report as of February 5, the trade increased its net short exposure to 15.5 million bales, while specs (8.1 million net long) and index funds (7.4 million net long) owned the corresponding positions on the other side.

The trade continued to increase the certified stock to 294’000 bales this week, including bales under review, which may keep the longs on the back burner for now. However, it is important to realize that over the next four months the trade will have to get out of its massive net futures short in current crop, either by buying it back or by rolling it into new crop.

That amounts to a lot of short covering in a limited time frame and spec longs are probably not going to be very accommodating. We estimate that around 13.0 million of the trade’s net short belongs to current crop, while the remaining 2.5 million bales are against new crop.

From a seasonal point of view this large trade short is a bit unusual. Typically the futures short position should be at its peak at harvest and then gradually decline as basis-long positions get sold over the course of the marketing year. This season the opposite has happened, as the trade net short position grew from 5.9 million bales in mid November to the current 15.5 million bales.

Traders may have become stuck on the idea that the market is a great sell above 80 cents and that prices can’t possibly go any higher in the face of these large global ending stocks. Assumptions like these have proven to be costly to traders in recent years, and we wouldn’t be surprised if history were to repeat itself over the coming months.

The market had three reports to look at since last Thursday and they weren’t really what the bears were hoping for. First up was the USDA report last Friday, which showed a familiar picture of increasing stocks in China (up 2.0 million bales) and declining inventories in the rest of the world (down 1.86 million bales).

Although projected ending stocks in China are at a record high of 42.61 million bales, they don’t really matter as much at the moment since they carry a hefty price tag of around 140 cents/lb and are therefore no threat to cotton that is priced in the 80s.

What does matter in regards to the futures market is that stocks outside China are getting tighter every month and are now estimated at just 39.25 million bales by the end of July. This is more or less the same level we had last season (38.85 million bales) and two years ago (38.40 million bales). What is important though is that in the previous two seasons the outlook for production in the rest of the world remained relatively high, whereas we are now looking at a significant decline in acreage next season.


Must ReadView All

May 31 deadline for registration of chemicals under REACH

Textiles | On 23rd May 2018

May 31 deadline for registration of chemicals under REACH

May 31 is the final deadline for companies to register all chemicals...

US cotton production projected to decline in 2018: USDA

Textiles | On 23rd May 2018

US cotton production projected to decline in 2018: USDA

US cotton production is forecast at 19.5 million bales, nearly 7 per...

Pakistan's textile exports up 8.13% in July-April FY18

Textiles | On 23rd May 2018

Pakistan's textile exports up 8.13% in July-April FY18

The value of textile and garment exports from Pakistan increased by...

Interviews View All

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Amardeep Singh
Orient Craft

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

Neel Sawhney
One Friday

‘The share of kidswear segment in the online sector is still small in...

Vikas Banduke

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

Kalai Selvi

Vidyashilp Academy in Bengaluru is the country's first Fairtrade School....

Harmeet Singh

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

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Eric Scholler
Groz-Beckert

The Indian market has huge potential in technical textiles, and by far,...

Johan Berlin
InvestKonsult Sweden AB

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

Amiben Shroff
Shrujan

From its modest beginning in the late 1960s, Shrujan has grown into a...

Mike Hoffman
Gildan Activewear SRL

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

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

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


May 2018

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

news category


Related Categories:

Advanced Search