Home / Knowledge / News / Textiles / NY cotton futures continue relentless slide
NY cotton futures continue relentless slide
12
Jul '14
NY futures extended their decline this week, with December falling another 351 points to close at 68.55 cents.

The market continued its relentless slide, driven by the same dynamics we talked about last week. The market’s weakness stems from a stark imbalance between active buyers and sellers, as bearish fundamentals and a dismal looking chart are prompting the trade as well as speculators to sell the market, while potential buyers are still not ready to catch the falling knife.

While some traders are willing to bite the bullet and begrudgingly place their hedges as the market keeps falling, scores of others continue to wait for that elusive rebound, only to regret their procrastination a day or two later. Since posting a high of 84.63 a little over two months ago - on May 5 - the December contract has fallen over 1600 points without offering potential sellers a bounce of more than a cent or two along the way.

We were rather surprised when we saw the latest CFTC report, which revealed that the trade was actually a net buyer during the week of June 24-July 1, reducing its net short by 1.1 million bales to just 7.0 million bales. In other words, instead of catching up on hedges, the trade was bold enough to lift existing ones. This move clearly backfired as the market resumed its downtrend this week and traders were once again forced to chase after this runaway market.

Seven million bales in net trade shorts are not nearly enough given that there is a US bumper crop in the making, along with other crops around the globe that need price protection. By comparison, last year the trade had 13.0 million bales in net shorts at the same date. We believe that it was primarily producers and to some lesser degree shippers that got caught on the wrong side of this down move.

Due to the Texas drought, the steep July/Dec inversion and a generally constructive price outlook until about six weeks ago, producers did not forward contract or hedge as much cotton as they otherwise would have. When the market started to fall in the wake of abundant rains in West Texas, speculators were first to react and started dumping their net long. Growers and merchants were only slowly adapting to the changed situation and have ever since been trying to catch up to this southbound freight train.

Speculators (‘Managed Funds’) reduced their net long position to 1.6 million bales as of July 1, down from 4.7 million on May 20, which was the week before it started to rain in Texas. However, when we look at the spec position as of last week, there were still 4.0 million bales in outright longs, while shorts had increased to 2.3 million bales. Based on the bearish chart we have to assume that most of these longs are headed for the exit, which would explain the tremendous selling pressure we have been witnessing lately.


Must ReadView All

Courtesy: ABARES

Textiles | On 13th Dec 2017

Australian cotton production to grow 4% in 2017-18: ABARES

Cotton production in Australia is forecast to rise by 4 per cent to...

Global economy now growing by about 3%: UN

Textiles | On 13th Dec 2017

Global economy now growing by about 3%: UN

There is an upturn in the global economy, and it is now growing by...

Clothing prices rise 3% in November in UK market

Apparel/Garments | On 13th Dec 2017

Clothing prices rise 3% in November in UK market

As post-Brexit referendum currency adjustment continues, prices of...

Interviews View All

Amit Jain
Shingora Textiles Ltd

‘In terms of fabric, the fastest growing category for us is a blend of...

Ajay Ghariwala
Luthra Group

We are ready to adopt or follow every opportunity

Karel Williams
Dow Microbial Control

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

Rikesh Mistry

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

C Dhandayuthapani

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

Riddhi Jain

Conceived in Europe and curated in New Delhi, NeceSera is a...

Steve Cole
Xerium Technologies

Steve Cole of Xerium Technologies discusses the industry. Xerium is the...

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Kerem Durdag
Biovation II LLC

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

Mike Hoffman
Gildan Activewear SRL

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

Madhu Jain
Madhu Jain

She grew up in the walled city of Old Delhi, completed her studies, and...

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer <b>Prathyusha Garimella</b> is known for blending ...

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