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

Courtesy: Li & Fung

Textiles | On 24th Mar 2017

Li & Fung forms new supply chain partnership with PVH Corp

Li & Fung Limited, the world's leader in consumer goods design,...

Courtesy: Alizilla

Apparel/Garments | On 24th Mar 2017

Alibaba's eWTP finds first overseas base in Malaysia

In a step towards using the internet to bring small businesses around ...

Textiles | On 24th Mar 2017

BJMC to produce cotton-jute blended denim fabrics

To meet demand from the market, Bangladesh Jute Mills Corporation...

Interviews View All

Mandeep Nagi
Shades of India

Women value something that is unique and has a flavour of India

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Rashi Menda

Every fifth sale we make on Zapyle is a repeat purchase

Paolo Ocleppo
Sandvik Hyperion

Paolo Ocleppo, Rotary Cutting Segment manager, Sandvik Hyperion discusses...

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Wendell Rodricks
Wendell Rodricks

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

Igor Chapurin

"Now we can see the Russian trend in international fashion. And Russian...

Sanjukta Dutta
Sanjukta's Studio

<b>Sanjukta Dutta</b> creates unique garments by clubbing prints of...

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:
March 2017

March 2017

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


Browse Our Archives


Subscribe today and get the latest News update in your mail box.
Advanced Search