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NY futures continued to advance this week
02 Mar '07
3 min read
However, when growers ask for 4 or 5 cents equity at the beginning of the season, US prices are uncompetitive by about that margin. In previous years the Step-2 payment was basically an 'equity adjustment factor', bringing US prices back in line with foreign competitors, but this year bridging this gap has not been easy.
But as always, the market has a way of working things out. What needed to happen was for foreign growths to get ahead of the US and for US cotton to accumulate in the loan. This has raised fears among equity holders that their loan cotton may not be able to find a buyer and that it would eventually have to be forfeited to the government.
Since there are additional charges associated with cotton that is forfeited, growers have started to dump their equities at next to nothing and there is even some talk of possibly seeing some negative equity values in the not to distant future. This almost panic-like drop in equity values has really leveled the playing field for US cotton and as a result we have recently seen a pick-up in sales.
Click here to read more:
But as always, the market has a way of working things out. What needed to happen was for foreign growths to get ahead of the US and for US cotton to accumulate in the loan. This has raised fears among equity holders that their loan cotton may not be able to find a buyer and that it would eventually have to be forfeited to the government.
Since there are additional charges associated with cotton that is forfeited, growers have started to dump their equities at next to nothing and there is even some talk of possibly seeing some negative equity values in the not to distant future. This almost panic-like drop in equity values has really leveled the playing field for US cotton and as a result we have recently seen a pick-up in sales.
Click here to read more:
Plexus Cotton, UK
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