NY cotton futures trade by-directionally this week
14 Jul '06
6 min read
Remember, the US crop has a guaranteed buyer that pays a very decent price - the US government! It is the market's job to create enough of an incentive to get this cotton out of government hands and this will not be an easy task in the coming season. However, due to the logistics issue it could well be that mills need US cotton more urgently than vice versa.
So where do we go from here? In the near term, there is still enough attractively priced current crop cotton available to keep mills in their comfort zone, with the market most likely remaining in a narrow trading range for most of the summer. However, as we approach the fourth quarter, it will become much more challenging for mills to procure their supplies in a timely fashion, and the performance and reliability of US cotton may prove to be worth a higher price.