Home / Knowledge / News / Textiles / NY cotton futures continue to drop this week
NY cotton futures continue to drop this week
02
Nov '13
October has not been kind to the cotton market, as December lost over 1000 points since opening at 87.23 cents at the beginning of the month.

A look at the candlestick chart reveals just how depressing the price action has been for the bulls, with the market closing lower than it opened in all but two of the last twenty sessions! What was it that spooked the cotton market into such a dismal performance?

We believe that a combination of factors contributed to this relentless selloff. For one, markets don’t like uncertainty, and there has been plenty of it lately with the US government shutdown preventing important reports from being released in a timely manner.

Traders are only slowly starting to catch up on data and we still don’t have an up-to-date “Commitment of Traders” report or a recent USDA supply/demand estimate. There is also a lot of uncertainty when it comes to China, with a variety of rumors making the rounds regarding the timing and price level of potential Reserve auction sales as well as the government’s support policy for the coming season.

The most recent CFTC report as of October 15 showed that large and small speculators liquidated over 10’000 longs in a week during which the market traded sideways between 83 and 84 cents.

There was no obvious reason for specs to pare their bets by a million bales at that particular time other than perhaps playing it safe in view of the ongoing government shutdown. The following week, when the market fell through long-term support, specs definitely had a valid reason to dump their remaining longs, although we have yet to find out how much they actually liquidated.

The negative impact of specs abandoning their longs got exacerbated by the rapidly expanding harvest in the Northern Hemisphere, which canceled out any remaining weather premium and prompted traders to become more aggressive with new crop offers. In other words, the lack of data, technical weakness and better than expected crops were the main reasons behind the market’s steep tumble.

However, as today’s US export sales report has shown, not all news is bad! Although the report contained 3 weeks worth of sales, the combined total of 690’800 running bales of Upland and Pima cotton is nothing to sneeze at, since the weekly average still amounted to over 230’000 bales. There were 21 markets participating in the buying, with China leading the way at over 300’000 bales.

Shipments of just 250’300 bales were still lagging, but that’s because the supply pipeline is basically empty and new crop is just starting to fill it back up. For the season total commitment now amount to around 5.1 million statistical bales, whereof just 1.8 million have so far been exported.

There is definitely export demand out there, and not just for US cotton, as a number of other origins have also found decent interest in recent weeks. In fact, physical prices have held up a lot better than NY futures lately and basis levels have therefore strengthened.


Must ReadView All

Pic: Shutterstock

Retail | On 26th Oct 2021

UK retail sales volumes drop by 0.2% in Sept 2021: ONS

UK retail sales volumes fell by 0.2 per cent in September following...

Pic: Shutterstock

Textiles | On 26th Oct 2021

US budget deficit hits $2.77 trn in 2021, the second highest

US budget deficit totalled $2.77 trillion for the fiscal that ended...

Pic: Shutterstock

Textiles | On 26th Oct 2021

China world's 2nd-largest importer for 11 years: Commerce ministry

China has been the world's second-largest importer for 11 consecutive ...

Interviews View All

Textile Industry, Head honchos

Textile Industry
Head honchos

Fabric selection & recommendation based on client's brief

Textile Industry, Head honchos

Textile Industry
Head honchos

The pandemic has reinstated need for organised retail spaces in Tier II...

Footwear Industry, Footwear Retailers

Footwear Industry
Footwear Retailers

Still struggling to mop up higher sales

Kriti Kanodia,

Kriti Kanodia

A TV show in 2012 where actor Sonam Kapoor customises her own pair of...

David Guiho,

David Guiho

Headquartered in Apt, South of France, Delta Plus designs, manufactures...

Ahmet Gecikli,

Ahmet Gecikli

Ser Mekatronik, founded in 2008, is specialised for providing mechanical...

Frank Heislitz, Freudenberg

Frank Heislitz
Freudenberg

Freudenberg Performance Materials is a leading global manufacturer of...

Seth Casden, Hologenix

Seth Casden
Hologenix

Hologenix is a material sciences company dedicated to developing products...

Dr. Sean Blamires, Evolution and Ecology Research Centre

Dr. Sean Blamires
Evolution and Ecology Research Centre

Using spider silk for clothing may not seem to be an attractive...

Samant Chauhan, Label Samant Chauhan

Samant Chauhan
Label Samant Chauhan

Delhi based fashion designer, <b>Samant Chauhan</b> who mostly works on...

Sunita Shanker, Label Sunita Shanker

Sunita Shanker
Label Sunita Shanker

Inspired by the rich traditional crafts of India, Sunita Shanker’s work is ...

Aprajita Toor, Aprajita Toor

Aprajita Toor
Aprajita Toor

The creations by <b>Aprajita Toor</b> were born out of a deep desire 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

Leave your Comments


October 2021

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


Advanced Search