Home / Knowledge / News / Textiles / NY cotton futures come under some pressure this week
NY cotton futures come under some pressure this week
10
Jan '14
Ever since reclaiming the 82 cents level about a month ago, the market has gone nowhere, closing the last 20 sessions in a very tight range of just 242 points, between 82.24 and 84.66 cents.

The changes in the CFTC spec/hedge report tell us that spec buying has been acting in support of the market, while trade selling has capped prices near the 85 cents level. The latest CFTC report as of December 31st showed speculators at 3.6 million bales net long, which means that they have bought a total of 3.2 million bales net since the market rallied above the 82 cents level on December 11.

Meanwhile the trade has used this 82-85 cents window to add a significant amount of additional shorts. As of December 31st, the trade net short position had risen to 10.3 million bales, an increase of 3.4 million bales in just three weeks. We suspect that most of these trade shorts are connected to basis-long positions of US, Australian and Brazilian cotton, as well as unfixed on-call positions.

We believe that the trade will likely be a net buyer of current crop futures from here on out, as there is not much grower cotton left to be hedged, while the unwinding of existing basis-longs and mill fixations will require short futures to be bought back. New crop is another story, as growers and merchants will become active in hedging next year’s production as we approach the planting window.

Index Funds are the most active sellers at the moment, since they are in the midst of their annual rebalancing, which started on January 8 and lasts for a total of five sessions. According to private estimates the rebalancing requires the selling of around 12’000 March futures, which is a rather large amount in such a short time frame. It is therefore not surprising that March gave up 180 points over the last two sessions and we expect to see additional pressure over the remaining three days of rebalancing. 

It is possible for this Index Fund related selling to push the spot month below 82 cents, which would trigger sell stops set by speculators. This in turn could lead to additional pressure and knock the market a lot lower than anticipated, possibly into the 78-80 cents range. However, if this were to happen we would consider it to be an excellent opportunity for mills to fix their remaining on-call contracts and for merchants to unload some of their basis-long positions.

US export sales for the week that ended on January 2nd amounted to 76’300 running bales of Upland and Pima cotton, which brings total commitments for the current marketing year to around 7.7 million statistical bales, of which 3.3 million bales have so far been exported.

The pace of sales has cooled off considerably over the holiday period, but we don’t agree with some of the negative commentary in regards to these lower export numbers. Although higher prices may have discouraged some buyers, we see it as a positive that there were still 17 markets interested in US cotton. We further suspect that supply constraints played a role in slowing export sales, as the amount of offers is becoming more limited, both for quality as well as logistical reasons.


Interviews View All

Office bearers, Textile industry

Office bearers
Textile industry

There might be negative impact on garment exports

Yashiki Gumber, Sahiba Fabrics

Yashiki Gumber
Sahiba Fabrics

Fabric does not restrict us from fashion trends

Akash Khetan, Narayan Tex Fab

Akash Khetan
Narayan Tex Fab

I find it hard to find professionals in Surat

Mario Ploner,

Mario Ploner

<div>Italian company Tecnomeccanica Biellese specialises in planning and...

Shivani Swamy,

Shivani Swamy

The Livinguard Technology is owned by Green Impact Holding AG based in...

Harssh Chheda,

Harssh Chheda

Mumbai-based Corporate Collars provides bespoke tailoring services for...

Marcel Alberts, Eurofibers

Marcel Alberts
Eurofibers

Coating at a fibre level is a practice not usually seen in the...

Kai Poehler, Voith Paper GmbH & Co. KG

Kai Poehler
Voith Paper GmbH & Co. KG

The glass mat industry is growing by five to eight per cent annually. Kai...

Sameer Sonkusale & Rachel Owyeung, Tufts University

Sameer Sonkusale & Rachel Owyeung
Tufts University

A team at the Tufts University in Massachusetts was recently in news for...

Samar Firdos, Arvind Ltd

Samar Firdos
Arvind Ltd

<b>Samar Firdos</b>, Chief Manager (Design) at Lifestyle Apparel Denim...

Sweta Agarwal, A Humming Way

Sweta Agarwal
A Humming Way

A Humming Way (AHW) is inspired by the old-world regalia of Rajasthan...

Ritu Kumar, Label Ritu Kumar

Ritu Kumar
Label Ritu Kumar

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

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


November 2019

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

Follow us on instagram

Follow

Follow Fibre2Fashion On


Advanced Search