Home / Knowledge / News / Textiles / Weather activity will jolt the market
Weather activity will jolt the market
26
Jul '08
New York cotton futures worked higher on the week mostly in response to lackluster trading as well as the lack of success the bears have had in taking prices lower. The 70 to 76 cent trading range will likely prevail over the coming two months; subject to any weather activity that would jolt the market. The market must deal with the heavy surplus of U.S. and world carryover and will likely attempt to move lower before moving higher.

Yet, the ever tightening world supply on the 2009 horizon will support the distant contract months. The market finds good support at 72 cents, but the possibility of a sell off to 67 cents is a real possibly. Once that is out of the way then the 75 to 78 cent target will be in place. Yet, the next two to four months will find the market under pressure of the largest carryover of world stocks in history, as well as a near record U.S. carryover.

Weather issues in India, the crop size in China and crop conditions in Texas will provide price leadership through the growing season. (Of course, the grains, oilseeds and crude oil markets can whip saw cotton on any given day or week.) Just as it did two years ago in passing the U.S. in cotton production, India is on track to pass China within a few years and become the world's producer of cotton.

However crop conditions in the major Indian growing regions have been very poor due to lack of moisture this season. While this week's rains did provide some relief, they were not as widespread as needed. Thus, the market will play close attention to crop events in India. The increasing Indian production has moved them to the forefront as a major exporter of cotton, mostly at the expense of the U.S. Any reduction of the Indian crop will mean a one to one ratio increase in U.S. exports.

For now China can claim to be the world's largest producer and consumer of cotton. The increasing importance of improved diets emphasized by the central government means less area will be devoted to cotton. It is likely that USDA will adjust lower its estimate of the Chine crop. However, such an adjustment is unlikely over the next two months.

Texas, expected to harvest about half of the total U.S. crop, and the primary U.S. supplier of cotton for medium and high end yarns, has taken the role as the principal growing region in the U.S. Thus, crop conditions there, an in West Texas particularly, will have a say in price direction.

With only two more reporting weeks left in the marketing year, U.S. export will fall short of its expected export target and carryover stocks are expected to rise to 10.4 million bales in the August USDA supply demand report. Export sales for the week ending July 18, were a net 55,100 RB.

Upland sales were 54,900 RB and Pima totaled 200 RB. Shipments were 258,600 RB of which only 600 RB were Pima. Primary destinations for Upland were China (110,100 RB); Mexico and Turkey. Sales for 2008-09 were 95,900 RB. Primary destinations were Turkey (17,500 RB); Indonesia and Thailand.

U.S. textile mills used cotton in June at an adjusted annual rate of 4.4 million bales, 500,000 bales lower than in June 2007. Annualized 2007-08 usage to date is 4.5 million bales compared to 4.8 million for last year.

Near term activity will be two sided with a bias back to the 72 cent range. However a small and likely short lived rally is attempting to raise its head. Longer term, the 2009 December contract could pass one dollar.

O.A. Cleveland


Must ReadView All

Apparel/Garments | On 25th Jun 2017

Half of 7,000 new apparel online each day target women

Adobe has released its first Digital Price Index for apparels,...

Textiles | On 25th Jun 2017

First Insight, Chico's FAS enter partnership

First Insight, a technology company transforming how retailers make...

Apparel/Garments | On 25th Jun 2017

Expand changing use of social and web resources

With over 400 million impressions to date and web traffic of over two ...

Interviews View All

Rajiv Sirohi
Shara

‘Portugal is taking away a major share of the mill made sector.’

Arvind Saraf
Triveni Sarees

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

Smita Murarka
Amanté

‘There is huge demand in the Indian lingerie market for non-wired styles.’

Steve Cole
Xerium Technologies

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

Johan Berlin
InvestKonsult Sweden AB

Investkonsult Sweden AB has been buying and selling second-hand textile...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Mike Hoffman
Gildan Activewear SRL

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

Rupa Sood and Sharan Apparao
Nayaab

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

Judy Frater
Somaiya Kala Vidya

Among the many honours showered on Frater, including Fulbright and Ford...

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:
June 2017

June 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