Home / Knowledge / News / Textiles / Cotton markets see strong volumes and rising open interest
Cotton markets see strong volumes and rising open interest
27
Jun '08
NY futures continued to add to their recent gains this week, as December advanced 170 points to close at 81.77 cents, while March rallied 212 points to close at 87.26 cents.

Even though West Texas received some much needed rain over the last 10 days, which will buy that crop some time, it was not enough to offset the bullish forces from outside market that are acting in support of cotton.

The CRB index set yet another record today at 463.27, up by over 3 percent this week, as crude oil closed at record highs this afternoon. At the time of this writing more rain is falling in the flood-ravaged areas of the Midwest, which will likely lead to further losses in these crops and keep their prices on a firm footing.

However, while December's advance of nearly 9 cents this month looks impressive, we are missing two key ingredients to validate this rally - strong volume and rising open interest. This week's trading volume of somewhere between 12'000 and 20'000 contracts a day was anemic, while open interest has been declining by about 58'000 contracts since this rally began on June 4th. At today's 215'041 contracts, open interest is only about 13'000 contracts higher than a year ago and significantly below its all-time high of 302'683 contracts on March 3rd.

Even though some of this drop in open interest can be explained by the July liquidation, we feel that it has been short-covering rather than new buying that has been driving this rally. The latest CFTC report, which shows futures and options positions as of June 17, tells us that outright large spec longs increased by only 433 contracts, while large spec shorts covered 13'578 contracts. The trade sold 43'758 contracts of its outright longs and covered 25'421 shorts, while index funds more or less maintained their net long position at 102'595 contracts.

While this lack of volume and rising open interest may look suspicious, it is quite possible that the market squeezes out a few more cents to the upside on additional short-covering. As we have explained last week, we do have a rather large block of longs that belongs to index funds and as we have seen in many of these high-flying commodities, it may be difficult to find enough willing shorts to offset these positions.

Outright spec short positions are relatively small at 3.1 mio bales, so we can't expect much buying power from that end. It is really the trade that owns most of the shorts these days and they seem to hold the key to prices from here on forward, at least until speculators decide to enter the game in bigger numbers again. However, with the witch hunt going on in Washington it could be a while before that happens.

So far the trade has been holding on to a fairly large outright short position, especially with the futures market being priced over 10 cents above equivalent cash prices on a C+F Far East basis. But as US stocks are being worked down over the summer and with a UScrop that is considerably smaller than in previous years, the trade has less of a need to hold a big short in New York.


Must ReadView All

Israeli minister announces tax cuts on consumer goods

Apparel/Garments | On 14th Dec 2017

Israeli minister announces tax cuts on consumer goods

The Israeli Government will slash taxes by $227 million, finance...

Courtesy: Kelvin Techstyles

Apparel/Garments | On 14th Dec 2017

Kelvin Techstyles fuses style and function in city apparel

Fusing style and function in outdoor clothing, Roseville,...

India’s WPI inflation for textiles up 0.3% in Nov 2017

Textiles | On 14th Dec 2017

India’s WPI inflation for textiles up 0.3% in Nov 2017

India’s annual rate of inflation, based on monthly wholesale price...

Interviews View All

Headhonchos
Indian textile value chain

Adopt innovative techniques, go for automisation rather than being...

Arvind Saraf
Triveni Sarees

e-Commerce is still evolving fast with constant flux and surprises

Md Hanifur Rahman
Aman Group

The level of understanding the job role and organisational requirements...

Anupam Arya

<div>Jaipur-based Fabriclore Retailing Pvt. Ltd. is attempting to revive...

Ravindra Jain, Ashish Baid

Oswal Prints Private Limited has been manufacturing and exporting ethnic...

Abhishek Pachauri

Reckon Industries adapts latest systems for manufacturing from designing...

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Kevin Nelson
TissueGen

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

Lynda Kelly
Suominen Corporation

Suominen Corporation is a manufacturer of nonwovens as roll goods for...

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

Mike Hoffman
Gildan Activewear SRL

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

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

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