Imported cotton grabs buyer attention as Dollar weakens
23 Apr '07
3 min read
Contrary to the futures market, the A-index (which is the average of the cheapest five quoted offer prices of international raw upland cotton) actually ended the week with a 5-point gain with US growths loosing more ground than foreign growths.
What this is saying is that foreign offers refuse to go down despite the weakness in New York futures, while US offers are still following the futures market down. But does US cotton really have to get cheaper? Not if we take guidance from recent US export sales reports. Over the last four weeks, the US has sold almost 2 million bales for export, with China booking around 1.1 million bales. It would be reasonable to predict a large export number in next week's sales report. With current US cotton supplies, this increase in sales can only come from a decreasing market.
Although increased sales have been reported over the last few weeks, its difficult to see how this market will reach the USDA export forecast of 13.5 million bales. In order to reach the current USDA export projection, shipments need to average approximately 415,000 running bales going forward. So far this season, total commitments or sales amount to 11.34 million statistical bales, where by 6.7 million bales have been exported.
US dollar weakness is turning buyers' attention to imported cotton. Old crop prices should continue to struggle staying above water. Do not be surprised tosee the New York July 07 contract fall to the May 07 values once May goes off the board. New crop contracts should continue to flounder in the short term, but the area reduction in the US, planting delays and mother nature will lend support to the northern hemisphere new crop December contract.
20240830145952.gif)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
