Interviews
NY futures constant to trade sideways
01 Sep '06
3 min read
NY futures continued to trade sideways, with December closing down just 5 points at 55.08 cents, while March actually gained 20 points to close at 58.73 cents.
The market seems to follow one of Newton's laws of physics lately, which states that an object at rest tends to stay at rest. Today was the 14th consecutive session in which the December contract settled in a narrow range between 54.05 and 56.00 cents.
The market's inertia is truly remarkable given the fact that there are currently 170'000 futures contracts, 123'500 call options and 68'000 put options outstanding.
Even though there are plenty of valid reasons why prices might head higher, we believe that the fear of an economic slowdown is holding the market back at the moment.
Some rather weak numbers from the US housing market have reinforced these worries last week, as July home sales were down 12.9 percent from a year earlier, with existing sales declining 11.2 percent and new sales falling 21.6 percent.
Year-to-date the numbers are a bit less dramatic, running just 6.8 percent behind last year's record pace and so far the average price for existing homes has held steady at +0.8 percent year-on-year.
Since the health of the US and global real estate market is an important factor in regards to cotton consumption, we would like to examine this subject a bit further.
After the 'new era' technology bubble burst in early 2000, decimating many stock portfolios in the process, central banks came to the rescue by lowering interest rates to their lowest level in nearly half a century. Short-term rates in the US went all the way down to 1 percent and the low cost of borrowing turned real estate into the next obsession of investors.
The market seems to follow one of Newton's laws of physics lately, which states that an object at rest tends to stay at rest. Today was the 14th consecutive session in which the December contract settled in a narrow range between 54.05 and 56.00 cents.
The market's inertia is truly remarkable given the fact that there are currently 170'000 futures contracts, 123'500 call options and 68'000 put options outstanding.
Even though there are plenty of valid reasons why prices might head higher, we believe that the fear of an economic slowdown is holding the market back at the moment.
Some rather weak numbers from the US housing market have reinforced these worries last week, as July home sales were down 12.9 percent from a year earlier, with existing sales declining 11.2 percent and new sales falling 21.6 percent.
Year-to-date the numbers are a bit less dramatic, running just 6.8 percent behind last year's record pace and so far the average price for existing homes has held steady at +0.8 percent year-on-year.
Since the health of the US and global real estate market is an important factor in regards to cotton consumption, we would like to examine this subject a bit further.
After the 'new era' technology bubble burst in early 2000, decimating many stock portfolios in the process, central banks came to the rescue by lowering interest rates to their lowest level in nearly half a century. Short-term rates in the US went all the way down to 1 percent and the low cost of borrowing turned real estate into the next obsession of investors.
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