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Dec cotton futures move up just 14 points last week
18
Aug '14
In comparison to closing of August 8, the December New York cotton futures contract moved up only 14 points over last Friday’s (August 15) settlement and maintained a 200 point trading range on the week.

This leaves one thinking, that there wasn’t much happening in the cotton world last week.

However, there are a lot of things bouncing around behind the scenes, says the latest Ecom weekly cotton market report.

First, mills are waking up and realizing that getting their hands on physical cotton before the end of the year may be more difficult than previously expected.

For the few new purchases that they are able to make, they have been forced to pay high basis levels, especially for the few September shipments that merchants are willing to make.

Second, the USDA increased their U.S. production estimate to 17.5 million bales, up 1 million bales. The increase was in ranges predicted by analyst.

However, given the increased dryness of late in west Texas and farmers looking for any way out of these depressed prices (i.e. insurance paying more than the current market price) we will see estimated production number start to come down toward the 17 million bale level.

Finally, with the market bouncing around between 62.00 and 65.00 for the past few weeks it seems like something has to give.

Specs may start covering short futures if the market gets much above the 65.00 level, causing the market to “bounce” but if the market breaks much below the 62.00 level they could start adding to their short positions, forcing the market even lower.

Looking at the fundamentals and technical indicators, the report expects a bounce but, like it said last week, “Hold on when everyone expects something because the opposite seems to happen”.

Fibre2fashion News Desk - India

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