Home / Knowledge / News / Textiles / Cotton market not focussed on cotton fundamentals
Cotton market not focussed on cotton fundamentals
Mar '08
Bonkers and Parabolic; the cotton market according to Mike Stevens...My "bridge too far" last week seems a bit immature with cotton prices soaring more than 500 points this week. Yet, this week's rapid advance will just mean the astrologist's Big Bang theory will have specific meaning to the cotton market the near future.

The futures market, in no way, is trading near term the fundamentals of cotton, but rather perceptions of the future. For now, the market is considerably overbought, based on near term fundamentals (supply and demand). Yet, the market is very reflective of market conditions for the New York December 2008 contract and contracts through 2010.

The parabolic analogy reminds me of taking paregoric for stomach discomfort--when it was legal--it made, for those with a prescription, everything in the world perfect; and we know human interaction is rather imperfect and commodity markets are nothing more than human interaction.

How can one go against the higher prices? If the May contract can post a solid close above 80 cents, the short term sky can be grasped within our hands. However, the inability to move above 80 cents during the coming week, in not sooner, will signal a pull back to 72-75 cents.

The price bridge has been constructed "too far" for the near term. Yet, it has a very solid footing for the 2009 and 2010 New York contracts. Specifically, I am short term bearish and long term bullish. The nearby contracts could experience as much as a 500 point correction. Yet, the long term expiry contracts are 1000 to 3000 points higher.

The crux is that the cotton market is not focused on cotton fundamentals, but rather the fundamentals associated with the grain contracts, relative to ethanol (energy) demand and the food crisis relative to vegetable oil consumption. Neither the energy crisis (man's dependence on fossil fuels) nor the food crisis (vegetable oil, non trans-fat) can see a near term solution before 2010. Thus, the daily grain and oilseed markets will continue to dominate the cotton market; prohibiting cotton from trading on its own fundamentals.

Must ReadView All

Textiles | On 27th Jun 2017

Govt defers tax deduction at source provision under GST

E-commerce players in India will not be required to deduct tax on...

Apparel/Garments | On 27th Jun 2017

Future Group aims Rs 12,000 crore in fashion business

Future Group, which runs retail stores across India under various...

Textiles | On 27th Jun 2017

AEPC & NSDL to help exporters with GST compliances

Apparel Export Promotion Council (AEPC) and National Securities...

Interviews View All

Yash Agarwal
Hitansh Online

Every market region has its own culture and trends

Poojaa Kumar Deepak

Zeven's performance sports apparel is designed for the Indian body type,...

Shiladitya K Joshi
Truetzschler India Private Limited

India ITME provides a platform to interact with our stakeholders

Mohammad Hassan
Biax Fiberfilm

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

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Steve Cole
Xerium Technologies

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

Mike Hoffman
Gildan Activewear SRL

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

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Wendell Rodricks
Wendell Rodricks

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

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


news category

Related Categories:
July 2017

July 2017

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


Browse Our Archives


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