Home / Knowledge / News / Textiles / NY cotton futures deflate after wild ride of Mar 26
NY cotton futures deflate after wild ride of Mar 26
11
Apr '14
The market has felt deflated ever since the wild ride on March 26, during which the spot contract shot up to a high of 97.35 cents/lb before dropping more than 500 points below that level by the end of the session.
 
From a technical point of view there have been a number of developments alerting us to a trend change lately and the weakness on the chart is likely to take a few more spec longs out of the game in the weeks ahead.
 
The spot month has once again broken below the uptrend line dating back to late November. This is not the first time that has happened, as the market showed similar weakness in late February and eventually managed to resume its uptrend. 
 
Nevertheless, this time around the breach looks more pronounced, since the market has been making lower highs and lower lows for a couple of weeks now. Further there are several momentum indicators - such as the RSI, MACD and Stochastic - confirming the weak trading action. 
 
However, any spec long liquidation is likely to encounter strong trade support, as there are still 4.1 million bales in unfixed on-call sales on May and July, while merchants have plenty of basis-longs to sell. Last week’s CFTC report showed the trade still 12.1 million bales net short, most of which are tied to current crop futures. 
 
This week the index fund roll has been providing a lot of liquidity for trade shorts to either get out entirely or to roll into July. Based on what open interest is telling us the majority of these shorts has opted for the latter. This harbours certain dangers, since liquidity will dry up considerably after the roll period and unless we see large-scale spec liquidation, these trade shorts may ultimately find it difficult to get out.
 
While May and July have been stalling, December traded to a new seven-month high today, thereby closing the July/Dec gap to just 945 points. This narrowing of the spread is a reflection of what we are witnessing in the cash market. Mills have been trying everything in their power to limit nearby purchases in order to benefit from cheaper new crop prices down the road. 
 
While that puts pressure on current crop offers, it also leads to pent-up demand later this year, which should act in support of December. Chinese mills for example are much more likely to use their additional import quotas in the third and fourth quarter, when prices are more attractive.


Interviews View All

Poojaa Kumar Deepak, Zeven

Poojaa Kumar Deepak
Zeven

Zeven's performance sports apparel is designed for the Indian body type,...

Mukesh Agarwal & Rajesh Agarwal, Madhuram Fincap Pvt Ltd

Mukesh Agarwal & Rajesh Agarwal
Madhuram Fincap Pvt Ltd

Increasing prices and lack of demand main issues facing industry

Textile industry, Head honchos

Textile industry
Head honchos

Relaxation in FDI norms will support growth of retail sector

Christiane Thies,

Christiane Thies

Founded in 1892, Thies has concentrated on the fabrication of high-quality ...

Teresa Neal,

Teresa Neal

Teresa Neal, an art professional with 25 years of experience, in...

Kamal Kulshreshth,

Kamal Kulshreshth

Colorjet is among the fastest-growing wide format digital inkjet print...

Frank Heislitz, Freudenberg

Frank Heislitz
Freudenberg

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

Mark Paterson, Technical Absorbents Ltd

Mark Paterson
Technical Absorbents Ltd

Mark Paterson, R&D manager of Technical Absorbents Ltd talks about Super...

Suresh Patel, Sidwin Fabric

Suresh Patel
Sidwin Fabric

Sidwin Fabric is a manufacturer and exporter of polypropylene textiles and ...

Aprajita Toor, Aprajita Toor

Aprajita Toor
Aprajita Toor

The creations by Aprajita Toor were born out of a deep desire to create...

Sweta Agarwal, A Humming Way

Sweta Agarwal
A Humming Way

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

Silvia Venturini Fendi, Fendi s.r.l

Silvia Venturini Fendi
Fendi s.r.l

"Yes, my confidence and positive attitude are my strengths and should be...

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