Home / Knowledge / News / Textiles / 'US Dollar' wild card in present times for cotton markets
'US Dollar' wild card in present times for cotton markets
31
Oct '08
NY futures continued their slide this week, with December dropping another 399 points to close at 45.09 cents, while March fell 414 points to close at 49.18 cents.

A rapidly declining AWP paved the way for further declines in the futures market. In fact, the USDA today implemented an additional adjustment that was provided for under the new Farm Bill, which means that instead of having the AWP at 41.68 cents next week as calculated under the current formula, it will now be set quite a bit lower at 40.12 cents.

Compared to the 44.62 cents we had in force this week, the AWP will therefore see a drop of 450 points starting tomorrow and this may explain some of the weakness in today's session.

This additional adjustment in the AWP will likely reinforce the negative feedback loop between NY futures and the AWP that has been in force for a while. There are currently two US quotes among the five cheapest that make up the A-index calculation and these quotes will see another steep drop tomorrow. The other three quotes currently used to calculate the A-index are Pakistan, Brazil and India. Pakistan is likely to follow the US quotes down due to its dire need for foreign exchange, while Brazil and India may put up some resistance. However, they too will ultimately be forced to lower their demands if they want to sell any cotton. In other words, it doesn't look too rosy for the futures market at the moment because there is no bottom in sight for the A-index/AWP.

After two decent export sales reports in the previous two weeks, last week's sales of just 58'500 running bales of Upland and Pima were disappointing, especially considering how cheap prices have become. For the season, total commitments now amount to 6.75 mio statistical bales, which is still about 0.5 mio bales ahead of last season, but the outlook for additional sales is not encouraging at the moment.

Particularly worrisome is the fact that 41'300 running bales were canceled last week, most of them in China. The largest buyer of US cotton in recent years will likely see a sharp drop in mill consumption this season and since its crop is at least as big as last year, Chinese imports are going to slow down considerably from here on forward.

With the US crop expected to yield around 13.8 mio bales and with beginning stocks at 9.8 mio bales, total supply this season amounts to around 23.6 mio bales, of which 6.75 mio bales has so far been committed for export and around 4.5 mio bales will be taken up by domestic mills.

This leaves about 12.35 mio bales available right now, which depending on the vantage point can be seen as negative or positive. Pessimists stress the fact that exports are grinding to a halt and that it will therefore be difficult to work these supplies down. Optimists on the other hand may point out that 11.25 mio bales out of a 13.8 mio bales crop are already committed and that we are only in October, with the bulk ofthe marketing year still ahead of us. If just another 2.5 mio bales were sold and shipped along with existing commitments, then we would already be back at the beginning stock level.

Must ReadView All

President Tsai Ing-wen delivering remarks before boarding her plane bound for Central America. Courtesy: Presdient's office

Textiles | On 16th Jan 2017

‘Textiles at centre of Taiwan’s new trade arrangements’

Textiles should be at the heart of Taiwan’s thinking while developing ...

Apparel/Garments | On 16th Jan 2017

Ralph Lauren develops policy on tracking wood based fabrics

In a bid to trace source of wood based fabrics like viscose and rayon ...

Apparel/Garments | On 16th Jan 2017

EC proposes enhanced market access for Sri Lanka

The European Commission (EC) has proposed that a significant part of...

Interviews View All

Vidhyaa Shankar. S
A Ganapathi Chettiar

'The usage of knits is getting into the boundaries of woven fabrics'

Md Hanifur Rahman
Aman Group

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

Veronique Lee
Modavanti

‘Sustainable fashion is trending upwards, slowly but surely, as people...

Ashok Desai
Bombay Textile Research Association

Bombay Textile Research Association (BTRA) is a leading name in textile...

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Pranav Mishra
Huemn

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

Karan Arora
Karan Arora

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

Silvia Venturini Fendi
Fendi s.r.l

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

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
January 2017

January 2017

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

SUBSCRIBE


Browse Our Archives

GO


eNEWS
Insights
Subscribe today and get the latest News update in your mail box.
Advanced Search