Home / Knowledge / News / Textiles / NY futures continue its powerful rally this week
NY futures continue its powerful rally this week
19
Feb '10
The NY futures market continued its powerful rally this week, as March gained another 405 points to close at 76.97 cents, while December advanced a more moderate 64 points to close at 73.34 cents.

The market is now firmly back in the grip of the bulls after the spot month has rallied more than 1000 points in a matter of just eight sessions. While cotton fundamentals have been friendly for quite some time, the technical picture has now aligned itself in that direction as well. Momentum is bullish, short- and long-term moving averages are all pointing higher and daily, weekly and monthly charts are displaying strong reversal patterns after the recent sell-off. When looking at a candlestick chart, which illustrates the balance of power between buyers and sellers, we notice eight consecutive white candles, indicating that the market has closed higher than it opened for the last eight sessions. In other words, the buyers have a strong upper hand at the moment and that is not likely to change anytime soon.

Last week we tried to explain the current 'imbalance' that exists between buyers and sellers. Although there are of course always an equal number of longs and shorts open at any given moment, the timing of when these positions become active, either by liquidating, increasing or rolling out, becomes an important part of the analysis. To quickly recap the situation we are in right now, we basically have a big block of index fund net longs opposing a large block of trade net shorts, with relatively little spec participation outside of that.

Index funds have strict rules as to how and when existing positions will be rolled forward. In general the May position will be rolled into July at the end of March/early April and the July position will be rolled into December at the end of May/early June. In between these rolling periods the index fund net long position remains relatively inactive.

Therefore, if trade shorts decided to go square, they would either have to wait until one of these rolling periods provides enough liquidity or else they need to find someone to take the other side. Another problem is that there are not many potential new shorts out there at the moment, since the trade will be a strong net buyer of futures itself until the middle of June (July expiration) and speculators are more interested in joining this bullish trend than betting against it. In short, we have a lot more traders interested in buying the market than vice versa, be it to close out basis-long positions that are being sold to mills, be it to offset mill fixations against which futures have previously been shorted or be it to establish new spec long positions.

What we have right now is a very tight fundamental situation in current crop, which will have no remedy until October/November, when the next Northern Hemisphere crop will bring relief. However, in terms of the futures market, all of the action regarding current crop will be condensed into the next four months, because by the middle of June all of the futures, options and unfixed on-call positions related to March, May and July will have to be dealt with.


Must ReadView All

Bangladesh, Sri Lanka may sign FTA soon

Apparel/Garments | On 15th Oct 2018

Bangladesh, Sri Lanka may sign FTA soon

Bangladesh may sign a free trade agreement (FTA) with Sri Lanka as...

China pumps $109 bn into economy amid trade war with US

Textiles | On 15th Oct 2018

China pumps $109 bn into economy amid trade war with US

China has decided to cut the reserve requirement ratios (RRRs) by one ...

Global lingerie market expected to reach $55 bn by 2024

Apparel/Garments | On 15th Oct 2018

Global lingerie market expected to reach $55 bn by 2024

Global lingerie market in 2015 was worth $33 billion and is expected...

Interviews View All

Top executives, Textile industry

Top executives
Textile industry

Union budget 2018-19 will have positive impact on apparel industry

Headhonchos, Textiles & allied industry

Headhonchos
Textiles & allied industry

Textiles industry is always in the forefront in accepting latest technology

Shiladitya K Joshi, Truetzschler India Private Limited

Shiladitya K Joshi
Truetzschler India Private Limited

India ITME provides a platform to interact with our stakeholders

Shyam Gupta & Ravi Gupta,

Shyam Gupta & Ravi Gupta

Based out of South Delhi, Gargee Designer's provides bespoke formal and...

John Kelley,

John Kelley

Textile Events is one of the largest textile fair in the United Kingdom,...

Ashish M Amin,

Ashish M Amin

Premier Looms is a leading provider of cutting-edge machinery and...

Larry L Kinn, Suominen Corporation

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

S Ziya Gumuser, Teknomelt

S Ziya Gumuser
Teknomelt

Turkish nonwoven manufacturer Teknomelt has been around for only seven...

Giorgio Mantovani, Corman S.p.A

Giorgio Mantovani
Corman S.p.A

Giorgio Mantovani, MD of Corman, with a presence in both Milano and New...

Adriano Goldschmied, AG Jeans

Adriano Goldschmied
AG Jeans

The hype around 'designer jeans' was created by him. And the new wave of...

Ritu Kumar, Label Ritu Kumar

Ritu Kumar
Label Ritu Kumar

‘Classics will return’ "There are a lot of people wearing western clothes ...

Amiben Shroff, Shrujan

Amiben Shroff
Shrujan

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

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


October 2018

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

news category


Related Categories:

Advanced Search