Home / Knowledge / News / Textiles / NY futures continues to move higher this week
NY futures continues to move higher this week
22
Jan '11
NY futures continued to move higher this week, as March rallied 888 points to close at 152.94 cents, while December advanced 332 points to close at 105.70 cents.

Last week we were wondering where the selling would be coming from after Index Funds were done with their rebalancing. It seems that sellers have once again become very selective in a market that still has a disproportionately high open interest in comparison to the small amount of cash cotton that remains uncommitted.

Open interest actually increased this week, as Hedge Funds reportedly bought a sizeable number of new contracts. On Wednesday, open interest jumped by 2'436 lots in March alone, with the total increasing by nearly 4'000 lots. As of this morning there were a total of 202'326 contracts open, of which 149'764 contracts are in March, May and July. In contrast, the certified stock measures a paltry 1'510 contracts (=151'000 bales) at the moment, which includes bales 'under review'.

When we look at the market from the perspective of long and short futures, we believe that the longs have a much stronger hand at the moment. These longs, which belong mainly to Index and Hedge Funds, benefit from an inverted market that allows them to roll their position forward to a lower price all the way out to December 2012. Given the bullish fundamental and technical picture, they seem to be in no hurry to exit their position anytime soon. Also, with the futures market still not overvalued in relation to the physical market, some trade-related longs may be willing to take delivery of certified stock.

On the other hand the shorts seem to be in a predicament. The trade owns most of the short positions, which are primarily held against unfixed on-call sales by mills (still nearly 8.1 million bales on March, May and July) and against physical longs. Rolling a short position forward is a losing proposition in an inverted market and it is basically prohibitive with the March/December spread at over 47 cents.

Since merchants won't allow their outstanding mill fixations to be extended past current crop, all of these current crop fixations will have to be dealt with by latest the middle of June. This adds up to a lot of potential buying pressure over the coming months.

Furthermore, every time a basis-long position gets sold, short futures are bought back, and since the bulk of the 2010/11-crop is already committed, there is very little hedge related selling left to counteract that. Brazil and Australia may still engage in some hedge selling against their crops, mainly in May and July futures, but these contracts will likely be covered as well because it does not make sense to roll them into December, at least not at massive inversion.

Since rolling into an abyss is not really an option for trade shorts, the only way out is to either buy these shorts back or to deliver cotton to the board. There will probably be some deliveries by merchants if the price is right, but the amount of certified stock is currently too small to alleviate the shorts' woes.


Must ReadView All

Apparel/Garments | On 22nd Sep 2017

Govt announces new duty drawback rates for garments

The Government of India has today announced the new duty drawback...

Courtesy: ITMA

Textiles | On 22nd Sep 2017

ITMA 2019 to focus on smart garment technologies

ITMA 2019, the world's largest textile and garment technology...

Apparel/Garments | On 22nd Sep 2017

New US FTC rule for RN used on textile product labels

The US Federal Trade Commission recently streamlined requirements...

Interviews View All

Nishank Patel
Shri Dinesh Mills Limited

Broad range of fabrics will sell well this financial year

Rajiv Sirohi
Shara

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

Veronique Lee
Modavanti

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

Lynda Kelly
Suominen Corporation

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

Iago Castro Asensio
RCfil Distribuciones S.L.

Iago Castro Asensio, International Business Manager of RCfil...

Suresh Patel
Sidwin Fabric

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

Prathyusha Garimella
Prathyusha Garimella

Hyderabad-based designer <b>Prathyusha Garimella</b> is known for blending ...

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Yash P. Kotak
Bombay Hemp Company

One of the directors of Bombay Hemp Company, Yash P. Kotak, speaks to...

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

September 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
74.5%
No
12.8%
Skip
12.8%

Total Votes: 47

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
61.7%
No
25.5%
Skip
12.8%

Total Votes: 47

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
87.2%
No
6.4%
Skip
6.4%

Total Votes: 47

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
70.2%
No
10.6%
Skip
19.1%

Total Votes: 47


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