Home / Knowledge / News / Textiles / Cotton futures bounce back
Cotton futures bounce back
29
Mar '08
NY futures rebounded this week, with March gaining 188 points to close at 72.90 cents, while December rallied 371 points to close at 82.99 cents.

With the CRB index and nearly all commodities turning back up this week, cotton was able to bounce as well but it did so in rather listless fashion, with volume dropping to a trickle and open interest receding by another 12'000 contracts this week. This kind of action suggests that it was merely a 'dead cat bounce' off of long-term support and not yet the beginning of a new leg up.

One of the main features this week was the widening of the differences between the various months, with the May/Dec spread at one point trading as wide as 1068 points, which represents over 150 points of carry per month. Even today's settlement of 1009 points or 144 points per month is still more than enough carry.

So why is this happening? The main reason is money, or rather a lack thereof. With the certificated stock approaching 900'000 bales this morning, carrying this kind of an inventory will require about 350 million dollars. On top of that a merchant willing to take the certificated stock would have to sell 9'000 July or December futures against it in order to lock in the spread and these short futures would require 32 mio dollars in initial margin requirement plus whatever variation margin may get generated.

A short futures position of that size represents a huge potential liability and therefore, as tempting as this carry trade may seem, the trade may be impossible to pull off from a financial point of view.

Must ReadView All

Textiles | On 26th May 2017

Lenzing unleashes new eco-friendly fibre

There's a new eco-friendly fibre on the anvil—Austrian speciality...

Apparel/Garments | On 26th May 2017

Benetton seeks approval for FDI in single-brand retail

Global fashion brand Benetton Group, has sought Indian government's...

Apparel/Garments | On 26th May 2017

Walmart to conduct GST workshops for SME suppliers

With the objective of supporting its small and medium-sized (SME)...

Interviews View All

Awen Delaval
Samatoa

'Natural fibres are appreciated for traditional authenticity'

Manfred Mentges
Sedo Treepoint GmbH

We see a higher demand in colour management systems, as customers see big...

Angelina Francesca Cheang
MY ANJE

'Consumers in the age-group 21 to 38 are driving the activewear trend'

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Kevin Nelson
TissueGen

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Marten Alkhagen
Swerea IVF AB

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

Rupa Sood and Sharan Apparao
Nayaab

Nayaab, an exhibition meant to celebrate Indian weaves, is in its second...

Tony Ward
Tony Ward

"You have to truly understand what your client wants, know her needs, what ...

Karan Arora
Karan Arora

Bridal couture created with rich Indian heritage, exquisite craftsmanship...

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

news category


Related Categories:
May 2017

May 2017

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

SUBSCRIBE


Browse Our Archives

GO


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