Home / Knowledge / News / Textiles / NY futures resume uptrend this week
NY futures resume uptrend this week
08
Mar '14
After meandering sideways for the past six weeks, unable to generate much momentum, the market finally exploded to the upside on heavy fund buying. Volume was brisk with over 23’400 lots trading in May alone and we expect to see a large spike in open interest tomorrow.
 
The market seems poised to challenge last year’s ‘three peaks’ on the weekly chart, which loom at 93.93, 92.58 and 93.90 cents. A move above this important resistance area would likely trigger additional fund buying and could make life quite miserable for the many trade shorts that remain. 
 
Cotton was in good company though, as Ag commodities continued to rally this week, with hedge funds covering shorts and/or adding new longs in near frantic fashion. Coffee saw the most spectacular gains, having exploded from 115 cents/lb to over 200 cents/lb in a matter of just five weeks on supply concerns, but cocoa, sugar, wheat, soybeans, and corn all had phenomenal gains as well since late January, often to the detriment of commercial traders who in many cases continue to hold bearish views.
 
The most recent CFTC report showed that large specs carried the biggest net long position across 13 Ag commodities since the summer of 2012, when drought in the US farm belt propelled many of these commodities to record highs. However, unlike two years ago the fundamentals are not quite as bullish, although there are notable exceptions such as coffee or lean hogs for example.
 
We believe that it is the large amount of liquidity in the financial system and a lack of attractive investment alternatives that drives these managed funds into the commodity arena.
 
It is no coincidence that many of these commodities started to take off in late January, after the emerging market scare sent tens of billions of dollars back to the US and Europe. With stocks getting pricey in the US after two years of phenomenal gains and with the bond market looking uninviting with interest rates as low as they are, fund managers in search of asset diversification and higher returns apparently decided to make a play in Ag commodities. 
 
While hedge funds are piling into the cotton market, the trade isn’t really in a position to put up a good fight at this point. Cotton futures are not really that overextended yet in regards to the physical market, as remaining cash supplies in the US and other ROW origins are tight, while mills still need to cover plenty of cotton in the months ahead.
 
Even if the futures market continued to rally and leaves cash prices behind, it is doubtful that there would be a large amount of tenderable grades left for delivery, considering that this year’s crop produced only around 7.5 million bales of certifiable cotton. 


Interviews View All

Textile industry, Head honchos

Textile industry
Head honchos

RCEP was always going to be a double-edged sword

Kamlesh Vaghela, RK Textiles

Kamlesh Vaghela
RK Textiles

Very few machinery manufacturers have R&D units

Shiladitya K Joshi, Truetzschler India Private Limited

Shiladitya K Joshi
Truetzschler India Private Limited

India ITME provides a platform to interact with our stakeholders

N Nithyanandan,

N Nithyanandan

Incorporated in 1999, Purani Textiless Private Limited is one of the...

Akshat Chaudhary,

Akshat Chaudhary

Aizome, Asia's first Fairtrade denim brand, is all set to launch next...

Mirella Sardini,

Mirella Sardini

A leading manufacturer of automated machinery and equipment for the...

Dave Rousse, INDA

Dave Rousse
INDA

INDA, the Association of the Nonwoven Fabrics Industry, serves hundreds of ...

Eric Scholler, Groz-Beckert

Eric Scholler
Groz-Beckert

The Indian market has huge potential in technical textiles, and by far,...

Silke Brand-Kirsch, Schlegel und Partner GmbH

Silke Brand-Kirsch
Schlegel und Partner GmbH

<div>Schlegel und Partner is the market research and consultancy company...

Sandeep and Sarah Shaikh Gonsalves, SS Homme

Sandeep and Sarah Shaikh Gonsalves
SS Homme

SS Homme celebrates the craft of traditional tailoring through the bespoke ...

Chandani Sahi, By Chandani

Chandani Sahi
By Chandani

By Chandani is a womenswear prêt couture brand with fusion silhouettes by...

Aneeth Arora, Péro

Aneeth Arora
Péro

The Woolmark Company has partnered with handmade fashion label Péro and...

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