Home / Knowledge / News / Textiles / Output of G-8 meeting disappoints traders apparently

Output of G-8 meeting disappoints traders apparently

10
Jul '09
NY futures closed basically unchanged this week, as December advanced just 21 points to close at 61.13 cents.

Before today's turnaround the cotton market had been on the defensive, pressured by negative outside markets and a US dollar that tried to show some strength. Crude Oil futures declined 10 dollars a barrel in a little over a week and the stock market has started to soften again as well.

Even though the cotton market had three losing sessions early in the week, they occurred in relatively small volume and on each occasion the close was well off the daily low, which indicated that there was decent support waiting underneath. Nevertheless, today's rally came as a bit of a surprise, much like the strong performance last week. What's encouraging for the bulls is that it again happened in increasing volume and that today's gains eclipsed the accumulated losses of the previous three sessions.

The question as to what or rather who is behind this strength is still a bit of an enigma. Last week's rumors that index funds were committing new money to our market proved to be true according to the latest CFTC report. As of June 30, index funds had increased their net position by 5'397 contracts to 67'004 contracts. This was the biggest weekly increase since February 2008, when index funds' net long position amounted to roughly twice the current size.

It is somewhat surprising to see new index fund money coming in at a time when the CFTC is holding hearings on how to regulate such investments. One theory is that additional positions are being placed ahead of new restrictions in the hope that they would be 'grandfathered in'.

Traditional speculators continued to be light net buyers last week, while the trade took the other side of index and hedge funds and increased its net short position after several weeks of reducing it. This seems to be an indication that the trade does not believe in these high futures prices.

Today's rally was probably caused by a combination of factors, such as the rebound in outside markets, renewed pressure on the US dollar, strong export shipments and an improving technical picture.

US exports of 337'100 running bales last week lifted total shipments for the season to 12.25 million bales as of July 2nd and with four weeks to go it is almost a foregone conclusion that exports will surpass the current USDA estimate of 12.7 million bales by some 400'000 - 500'000 bales.

Tomorrow the USDA will release its latest supply/demand estimate and it is widely believed that the US numbers will present a slightly bullish scenario, while world numbers are not expected to reflect big changes. When we look at the US balance sheet, we started the season with a 22.85 million bales of supply, of which 3.55 million are taken by domestic mills and 12.25 million bales have so far been exported.

That leaves just 7.05 million bales in inventory, of which 3.0 million are already committed for export and probably around 0.9 million have been booked by domestic mills for Aug/Oct delivery. This means that just a little over 3 million bales of current crop remain available for sale at this point. Considering that China is about to release another import quota of about 1.8 million bales and that traditional export markets still need supplies for summer shipment, it is quite possible that the US will be nearly sold out by October.


Must ReadView All

Pic: Shutterstock

Textiles | On 22nd Aug 2019

US-China trade war uncertainty could cost $585 bn by 2021

Uncertainty arising out of the US-China trade conflict could lower...

Pic: Shutterstock

Apparel/Garments | On 22nd Aug 2019

Myanmar's export earnings from CMP garments rise by $1 bn

Myanmar's cut-make-pack garment industry earned over $3.8 billion...

Pic: Shutterstock

Textiles | On 22nd Aug 2019

Cotton prices drop for 10th consecutive week in Brazil

Cotton prices continued to fall in the Brazilian market for the 10th...

Interviews View All

Frank Gossmann, Rotorcraft AG

Frank Gossmann
Rotorcraft AG

‘RT3 motto is: Do not check millimetres, check colours.’

Top executives, Textile industry, India

Top executives
Textile industry, India

The event should be organised every year

Textile industry, Head honchos

Textile industry
Head honchos

Quality should be the #1 priority

Gagan Gulati,

Gagan Gulati

PG Silk Mills Private Limited had a humble start with a hand-dyeing unit....

Will Qian,

Will Qian

Honghua Digital Technology Stock Co., Ltd. specialises in the R&D,...

Wesly Clements,

Wesly Clements

US-based Baldwin Technology Company is a global manufacturer and supplier...

Ian Russell, Pireta

Ian Russell
Pireta

UK-based Pireta has developed a unique free-form process to add durable,...

Hemant Bheda, Arevo

Hemant Bheda
Arevo

Arevo, based in Silicon Valley in California, develops technology to...

Eric Scholler, Groz-Beckert

Eric Scholler
Groz-Beckert

The Indian market has huge potential in technical textiles, and by far,...

Amiben Shroff, Shrujan

Amiben Shroff
Shrujan

From its modest beginning in the late 1960s, Shrujan has grown into a...

Varsha Wadhwa, VW

Varsha Wadhwa
VW

Coming from a family that ran a business of jute and linen mills since...

Nisha Chanda, Whistling Woods International School of Fashion

Nisha Chanda
Whistling Woods International School of Fashion

<div>A lack of upgraded courses in costume designing and fashion as per...

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


August 2019

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

news category


Related Categories:

Advanced Search