News Flash

Reinhart cotton market report

20 Nov '06

3 min read

Futures trading volume this week was one of the heaviest on record, which can mostly be attributed to position rolling out of Dec06 into Mar07 in a range of 290 to 405 pts. The volume of spreads had diminished substantially as we approach First Notice Day on November 22.

The speculative net short position jumped to 14.9 percent last week versus 7.2 percent previously, which is the highest short side exposure since December 2004.

Following this week's activity, we would expect to see another increase in their short position. Today, Dec06, Mar07, May07 and July07 all made life-of-contract lows.

Decerts of 103,648 yesterday aroused some interest, but had little effect on the market with certificated stocks still extremely high at 721,916 and with 21,192 awaiting review.

NYK Futures - Dec06 at 47.40, down 169 pts. (high 49.20/low 47.06), Mch07 at 51.15, down 198 pts. (52.80/50.90). The Cotlook 2006/07 A (FE) Index at 56.75, down 140 pts. for the week.

U.S. Export Report - Weekly net sales are holding their pace at 177,400 bales. They were dominated by Turkey (90,000), who is taking advantage of the lower NYK to cover shortages from their recent crop losses and lower potential imports from Greece. Shipments amounted to 150,000.

Total commitment to date equals 4.5 million 480 lb. bales (compared to 7.9 last season at this time) comprised of total exports of 1.9 (3.2) and outstanding sales of 2.6 (4.7). To reach USDA's new optimistic 16.2 million export projection, weekly sales need to average 327,000 running bales, with a one million bale rollover and exports at 367,000.

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