Home / Knowledge / News / Textiles / NY futures settle slightly higher this week
NY futures settle slightly higher this week
26
Sep '08
NY futures settled slightly higher this week, with December adding 90 points to close at 61.66 cents, while March advanced 86 points to close at 66.20 cents.

During a week where the financial markets were at the brink of collapse, it was quite an achievement for the cotton market to hold itself together as well as it did. After the December contract had briefly dipped below 60 cents last Thursday, the market experienced a strong bounce early in the week, but this rally attempt quickly fizzled since there was no volume behind it. However, with open interest declining significantly over the last few sessions, the bears don't have any momentum either and we may therefore have a market in transition, waiting for new direction.

The latest ICE spec/hedge report told a slightly different story than in recent weeks, as 'hedge' longs (presumably related to index funds) liquidated over 11'000 contracts last week, while trade shorts covered nearly 8'500 contracts. Both spec camps were on the buy side for a change, with long speculators adding nearly 800 contracts and spec shorts covering 2'100 contracts.

We believe that this heavy hedge long liquidation was related to Lehman Brothers, AIG and possibly some other groups that needed or wanted to get out of commodity investments. However, the decline in trading volume this week seems to indicate that for now the worst of this liquidation process is behind us.

US export sales have been quite encouraging over the last two weeks at more than 700'000 running bales combined, which brings total sales for the season to 5.6 mio statistical bales, of which around 1.8 mio bales have been shipped so far.

When we look at the current statistical balance sheet of the US, we started the season in August with a revised 9.8 mio bales in beginning stocks, of which 5.6 mio bales have so far been committed for export and around 2.0 mio bales have been booked by domestic mills, assuming their coverage is up to Dec/Jan. Since basically all of these export and domestic commitments will be supplied out of existing stocks, it leaves just about 2.2 mio bales of old crop cotton for sale.

We all know that the financial situation of the cotton trade as a whole has been severely compromised due to the events earlier this year and it has therefore become very burdensome to carry inventory in the current market environment. Owners of such old crop inventory have been eager to reduce their exposure over the last few months, which led to the kind of price pressure we have witnessed since June.

The good news is that we are finally getting to the tail end of this old crop inventory, with only a little over 2 mio bales left for sale. If we further consider that around 1.4 mio bales are currently in the certificated stock, there is really not that much cotton left for sale.

Our point is that once this old crop inventory is gone, the market will feel like a big burden has been lifted off its shoulders, because new crop cotton is playing with a different set of rules, having a full nine months of government loan financing available. It is therefore highly unlikely that new crop cotton will be available at the current cheap price level anytime soon.

Must ReadView All

Textiles | On 10th Dec 2016

India’s 2016-17 cotton import to touch 17 lakh bales

The import of cotton from international markets by spinning mills in...

Textiles | On 10th Dec 2016

US textile & apparel imports fall 6.50% in Jan-Oct ’16

The import of textiles and apparel by United States dropped 6.50 per...

Textiles | On 10th Dec 2016

Indian textile hubs adopt cashless payment modes

The textile ministry is promoting cashless payment within the...

Interviews View All

Pratik Bachkaniwala
Palod Himson Machines

Fabric processing machines are picking up

Spokesperson
Hugo Boss

'Hugo Boss works with carefully selected sourcing partners'

Amardeep Singh
Orient Craft

'In export markets, the trend in terms of embroidery, is towards matte...

Kerem Durdag
Biovation II LLC

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

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Paolo Ocleppo
Sandvik Hyperion

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

Judy Frater
Somaiya Kala Vidya

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

Mike Hoffman
Gildan Activewear SRL

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

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
December 2016

December 2016

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

SUBSCRIBE


Browse Our Archives

GO


Advanced Search