Home / Knowledge / News / Textiles / Cotton prices rally but loose steam on weekend

Cotton prices rally but loose steam on weekend

10
Nov '08
Cotton prices at least attempted a rally the early part of the week but failed to reach any significant price level that could have provided a hint of bottoming action.

Despondent over one piece of bad economic news after another, retail sales, unemployment; both the worst in decades and fundamentally fueled by extremely weak prices in China, cotton futures continued their trek into new contract lows both Thursday and Friday. In fact prices were the lowest since February 2005.

Our number one customer, the world's largest buyer of cotton, China has been hit hard by the global recession. Nearly half of this year's crop remains unsold and there are reports of sharp cut backs and even closure of some mills. This all goes to have a trendous effect on our exports.

Over the weekend, the Chinese government announced plans for a huge spending and stimulus measure targeting people's livelihood in an attempt tp offset the impact of slowing global growth.

Interestingly the open interest jumped 4,639 last Wednesday's trading. That was the biggest one-day increase in over 8 months. It is unknown of course, whether this was due to the expiring options or the upcoming December delivery period. December cotton goes into delivery in two weeks on Friday November 21st.

An indicator being mentioned more and more is the Baltic Dry Index, an index of shipping rates of 26 routes. It can be a gauge of how much business is being transacted around the world. After going into all time highs in May and early June, prices have now retraced 100 percent of the bull move from six years ago.

Technically, cotton has now reached the 4200-4240 lows of August 2004-February 2005 so it is critical that the want to-be-bulls dig in right here. Dec closed only 1,380 points above cotton's modern-times all time record low of 2820 Should these lows not hold, you will hear increased talk of cotton's record lows from six years ago. The modest pop we were looking for last week was virtually insignificant in that it fell short of reaching buy stops above recent highs.

A close now above 4481 would exceed the 9 day moving average and threaten a two week downtrend line above which the 21 day moving average at 4739 as a very near-term upside target. All technical indicators are in oversold condition. However, it very well may be after first notice day before the market can put in much of a bottom. There is a seasonal tendency, although not very reliable particularly in a year such as this, for prices to turn up after the December delivery situation becomes clearer.

The November report of cotton production from the monthly USDA survey as well as domestic and world supply/demand projections is due this morning. There may be changes in production however, a major factor that could very well effect the Texas High and Rolling Plains (Districts 1-N, 1-S, 2-N and 2-S) estimates is the factor that for the first time, the small bolls less than an inch will not be counted.


Must ReadView All

Pic: Shutterstock

Textiles | On 22nd Sep 2020

EFTA market study aims to increase trade with Philippines

To strengthen The Philippines' trade with the European Free Trade...

Pic: UKFT

Textiles | On 22nd Sep 2020

UKFT demands reversal to end VAT-free shopping

UKFT is urging the government to reverse its decision to end VAT-free ...

Pic: Centric Brands

Retail | On 22nd Sep 2020

Centric Brands confirms reorganisation plan

US-based Centric Brands Inc. recently announced that the US...

Interviews View All

Amit Jain, Shingora Textiles Ltd

Amit Jain
Shingora Textiles Ltd

‘In terms of fabric, the fastest growing category for us is a blend of...

Varinder Singh Jawanda, Trendy Bharat

Varinder Singh Jawanda
Trendy Bharat

Sizing and fitting issues are inherent problems for companies expanding...

Top executives, Textile industry

Top executives
Textile industry

Textile institutes need to change their curriculum

Harssh Chheda,

Harssh Chheda

Mumbai-based Corporate Collars provides bespoke tailoring services for...

Tom,

Tom

<div>Inkbank is a leading supplier of inkjet inks and inkjet printing...

Lin Jing,

Lin Jing

Jiangsu New Victor is a Chinese mechanical equipment manufacturing...

Sachin Pendharkar, Dieffenbacher India Pvt Ltd

Sachin Pendharkar
Dieffenbacher India Pvt Ltd

Germany-based Dieffenbacher Group is a producer of high-quality composites ...

Giulio Cesareo, Directa Plus SpA

Giulio Cesareo
Directa Plus SpA

Established in 2005, Direct Plus SpA, is one of the largest producers and...

Silke Brand-Kirsch, Schlegel und Partner

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

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...

Seema Agrawal, Artisan Saga

Seema Agrawal
Artisan Saga

Artisan Saga, founded by Kaushik Rajani and Seema Agrawal, is an online...

Rupa Sood and Sharan Apparao, Nayaab

Rupa Sood and Sharan Apparao
Nayaab

Nayaab, an exhibition meant to celebrate Indian weaves, is in its second...

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


September 2020

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.


Advanced Search