Home / Knowledge / News / Textiles / NY futures rebound this week; trading volume remains low
NY futures rebound this week; trading volume remains low
14
Sep '13
After trading to a low of 82.11 cents last week, downside momentum faded and the market was able to move slightly higher this week, with December closing today about 300 points above important long-term support at 81.72 cents.

The lack of momentum was evident from the low trading volume, which averaged just around 14’000 contracts per session between Friday and Wednesday, before picking up slightly to an estimated 17’371 lots today.

The much anticipated USDA report contained no great surprises, as world production was increased by about a million bales to 117.4 million bales due to the bumper crop in India, while global mill use was reduced by 0.3 million to 109.5 million bales. Even though global ending stocks increased by nearly a million bales to 94.7 million bales, the market failed to react negatively to the report.

As we have learned over the last couple of seasons, what drives prices is not so much the total quantity of stocks, but rather where these stocks are located and whether and at what price they are available.

From that point of view the latest USDA report is perfectly balanced, because the ROW (rest of the world) is expected to produce a seasonal surplus of 10.9 million bales, which Chinese imports of 11.0 million bales are supposed to absorb. In other words, ROW inventories are expected to stay at a relatively tight level of 36.4 million bales. For comparison, over the past ten seasons ROW stocks have averaged between 32.5 and 42.0 million bales.

However, these ROW stocks could get a lot tighter if China were to import more cotton than expected. Over the last two seasons most analysts have significantly underestimated Chinese imports! For example, a year ago the USDA estimated in its September report that China would import 12.0 million bales, but they ended up taking 20.3 million bales.

Same story two seasons ago, when China was expected to import 14.5 million bales and the final number was 24.5 million bales. What if Chinese imports were to beat expectations again this season?

Remember, China needs to take only 10.9 million bales to wipe out the ROW production surplus, which is not much compared to what they have imported over the last two seasons. Since China hasn’t made any changes to its cotton policy yet and in fact has started its procurement program this week, paying 20’400 yuan/ton or 150.00 cents/lb for domestic cotton, the incentive to import more affordable cotton and yarn is certainly there.

China can control imports to some degree via quotas, but once the yearly TRQ (Tariff Rate Quota) and the contractual 3-to-1 quota allocations have been filled, it doesn’t really take that much more before China starts digging into ROW stocks.

In that regard we need to keep an eye on imports that may be done at the full 40% tariff, for which no quota is required. Last year Chinese mills and traders imported an estimated 900’000 tons (4.1 million bales) under that scheme and if world prices were to drop by some five cents from current levels, we would likely uncover an open-ended bid from Chinese buyers. Sooner or later China will have to make some changes to its current policy in order to prevent any further build-up of stocks, but for now it is still business as usual!


Must ReadView All

India’s WPI inflation for textiles up 0.3% in Nov 2017

Textiles | On 14th Dec 2017

India’s WPI inflation for textiles up 0.3% in Nov 2017

India’s annual rate of inflation, based on monthly wholesale price...

Cambodia’s economic growth to remain strong in 2017 & 2018

Apparel/Garments | On 14th Dec 2017

Cambodia’s economic growth to remain strong in 2017 & 2018

Cambodia’s economy is expected to grow at 6.9 per cent and 6.8 per...

2 garment factories to be set up in Jordan’s Arjan, Souf

Apparel/Garments | On 14th Dec 2017

2 garment factories to be set up in Jordan’s Arjan, Souf

Jordanian Prime Minister Hani Mulki recently laid the foundation...

Interviews View All

Divyesh Mashruwala
Akshar Industries

Surat dominates foiling, embossing and pleating

Headhonchos
Indian textile value chain

Adopt innovative techniques, go for automisation rather than being...

Sunil Kumar Sharma
Loknayak JPNSSSG Ltd

'The blend of cotton–linen yarn has high demand in the domestic and...

Rikesh Mistry

Jupiter Comtex Pvt Ltd, established in 1973, started its textile machinery ...

Anupam Arya

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

C Dhandayuthapani

MAG Solvics Private Limited was established in 1991 to design and develop...

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Eric Scholler
Groz-Beckert

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

Wendell Rodricks
Wendell Rodricks

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

Anisha Chaudhari
Threads & Shirts

Threads &amp; Shirts is a freshly-tailored concept providing men/women a...

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

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

December 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
69.6%
No
12.0%
Skip
18.5%

Total Votes: 92

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
62.0%
No
30.4%
Skip
7.6%

Total Votes: 92

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
87.0%
No
9.8%
Skip
3.3%

Total Votes: 92

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
81.5%
No
8.7%
Skip
9.8%

Total Votes: 92


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