Home / Knowledge / News / Textiles / Mills seem to struggle with recessionary economic environment
Mills seem to struggle with recessionary economic environment
18
Aug '08
NY futures remained under pressure this week, as December fell another 190 points to close at 69.48 cents, while March dropped 185 points to close at 74.54 cents.

The market continued to meander nervously in a narrow range between 68.54 and 71.74 cents this week, with a couple of short-lived spikes being generated by a friendly looking USDA report and a temporary bounce in outside markets. Other than that the cotton market did not have much to feed on and trading volume remained relatively subdued.

The only subtle change in regards to volume was the fact that the market is becoming more active on up days. For example, during yesterday's rally the market traded nearly 20'000 futures and over 16'000 options, while today's renewed collapse was probably in reaction to a lack of buying rather than any heavy selling, as just 9'000 futures and less than 6'000 options changed hands. This lack of momentum in the direction of the underlying trend, which currently is down, is often an indication that the trend is about to end, although this bottoming process may take some time.

Unlike other commodities, which have seen notable contractions in open interest since their prices peaked in late June, open interest in cotton has basically stayed unchanged, since it still measures about the same 216'000 futures contracts as it did back on June 26, when December traded about 12 cents higher than now.

Even when we look at the CFTC report, which provides us with a combined open interest figure for both futures and options, we have nearly identical numbers when we compare June 24 (378'675 contracts) to the latest available report of August 5 (380'635 contracts).

The market seems to be under the impression that spec long liquidation was the driving force behind the market's weakness, but when we look at the changes in open interest we get a slightly different story. Since June 24, large and small speculators went from a 41'000 contracts net long position in futures and options to a 1'000 contracts net short position, but less than 40% of this change came from long liquidation, while over 60% was due to new short positions. The net position of index funds on the other hand has not changed at all, as it is still around 104'000 contracts net long.

Merchants and mills have used this drop in the market to trade physical cotton and fix the price on existing on-call contracts, which prompted the trade to buy around 42'000 contracts net futures and options. The majority of that net buying, about 85%, covered existing short positions and only a small part went towards increasing long positions.

Therefore, the main feature over these last seven weeks, during which the market declined from the low 80s into to the high 60s was a handover of trade shorts to spec shorts, with the longs playing a relatively minor role in all this. The reason the market went down so hard is that speculators were shorting the market quite aggressively as technical levels were breached and outside market displayed weakness, while the trade seemed quite patient, buying and fixing the market only on fairly pronounced dips.


Must ReadView All

ITC, ICS tie up to help Moroccan textile value chain

Textiles | On 21st Apr 2018

ITC, ICS tie up to help Moroccan textile value chain

The International Trade Centre (ITC) has partnered with ICS, which...

Bangladesh garment manufacturers call for fair pricing

Apparel/Garments | On 21st Apr 2018

Bangladesh garment manufacturers call for fair pricing

Bangladesh garment manufacturers want a ‘commensurate adjustment’ by...

Pak ministry proposes extension to PM package for 2018-19

Textiles | On 21st Apr 2018

Pak ministry proposes extension to PM package for 2018-19

Pakistani textile ministry has reportedly proposed extending the...

Interviews View All

Varinder Singh Jawanda
Trendy Bharat

Sizing and fitting issues are inherent problems for companies expanding...

Poojaa Kumar Deepak
Zeven

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

Abhishek Ganguly
Puma India

‘As a brand, Puma is always looking for new and innovative ways to inspire ...

Urmil Arya

Sushila International, a well established textile organisation established ...

Anupam Arya

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

Harmeet Singh

New Delhi-based Jogindra Industries Private Limited provides an assortment ...

Kerem Durdag
Biovation II LLC

Kerem Durdag, CEO, Biovation II LLC, provides an insight into future...

Mohammad Hassan
Biax Fiberfilm

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

Suresh Patel
Sidwin Fabric

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

Akta Adani
India Boulevard

India Boulevard is a San Francisco-based curated fashion marketplace that...

Sonam & Paras Modi
SVA

Sonam and Paras Modi's Sva Couture is synonymous with head-turning...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

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

Leave your Comments


April 2018

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
69.9%
No
12.6%
Skip
17.5%

Total Votes: 103

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
63.1%
No
29.1%
Skip
7.8%

Total Votes: 103

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
87.4%
No
8.7%
Skip
3.9%

Total Votes: 103

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
82.5%
No
7.8%
Skip
9.7%

Total Votes: 103


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