Interviews
New Year to be year of 'High Cotton'
05 Jan '08
3 min read
World demand continues robust. A few examples include record monthly yarn output in China in November; strong apparel imports by Korea, and Japanese retail sales reaching a yearly high in November. This is not to imply that there is not some congestion around the globe.
Europe is a bit slow, but Asia and the Subcontinent remain strong. On a positive, USDA has suggested that its estimate of Chinese consumption for 2006 domestic use may be as much as 2.1 million bales above its original estimate. Noting that, the per capita consumption boom for cotton is exploding in both China and the Subcontinent.
U.S. textile mills used cotton at an annualized rate of 4.8 million bales in November. However, the U.S. department of Commerce lowered the usage rate for October by 100,000 bales, reducing it to 4.7 million. Yet, U.S. consumption for the first four months of the 2007-08 marketing year is 200,000 bales above the current USDA estimate for the year of 4.6 million bales. Nevertheless, it should be noted that higher cotton prices will reduce U.S. consumption.
Certificated stocks have slipped to 530,591 bales. With none are waiting review, a key to higher prices is a continued downtrend in certificated stocks. The market is higher, but the 70 cent barrier will be breached. Yet, for now that barrier is all but impenetrable.
Europe is a bit slow, but Asia and the Subcontinent remain strong. On a positive, USDA has suggested that its estimate of Chinese consumption for 2006 domestic use may be as much as 2.1 million bales above its original estimate. Noting that, the per capita consumption boom for cotton is exploding in both China and the Subcontinent.
U.S. textile mills used cotton at an annualized rate of 4.8 million bales in November. However, the U.S. department of Commerce lowered the usage rate for October by 100,000 bales, reducing it to 4.7 million. Yet, U.S. consumption for the first four months of the 2007-08 marketing year is 200,000 bales above the current USDA estimate for the year of 4.6 million bales. Nevertheless, it should be noted that higher cotton prices will reduce U.S. consumption.
Certificated stocks have slipped to 530,591 bales. With none are waiting review, a key to higher prices is a continued downtrend in certificated stocks. The market is higher, but the 70 cent barrier will be breached. Yet, for now that barrier is all but impenetrable.
O.A. Cleveland
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