Home / Knowledge / News / Textiles / NY futures rebound this week

NY futures rebound this week

03
Apr '10
NY futures rebounded this week, with May advancing 132 points to close at 81.50 cents, while December inched up 12 points to close at 75.10 cents.

Since climbing above the 80 cents mark on February 25, the market has been meandering sideways in a range of just 590 points between 78.70 to 84.60 cents. Although it has corrected below 80 cents on a couple of occasions, the market has found solid support from trade buying, which has allowed it to rebound quickly. However, so far there has not been enough momentum to take out the March 1 highs of 83.29 (close) and 84.60 (intra-day) and therefore the market remains confined to its sideways trend for now.

What's troubling for the still large contingent of trade shorts is that open interest has been increasing as spec longs have been adding to their positions and there is no indication that they will be getting out of their longs anytime soon. Their bullish appetite seems to be growing as stocks are rallying, oil futures are back above 85 dollars a barrel and the outlook on interest rates and inflation is pointing higher. Open interest in cotton futures stood at 192'841 contracts this morning, which is within a few hundred lots of the highest level since this bull market started back in March 2009.

The latest CFTC spec/hedge report, which includes futures and options, confirms that the increase in open interest has been the result of additional spec and index fund buying, while the trade continued to sell into the rising trend. As of March 23rd, net spec longs amounted to 6.25 million bales and net index fund longs stood at 7.45 million bales, while trade net shorts had increased to 13.7 million bales. Based on the current open interest in futures, we assume that about 75 percent of these positions are still in the May and July contracts. What is puzzling to us is that the trade continues to increase its net short position even though time is beginning to run out. First notice day for the July contract is less than three months away (June 24th) and one has to wonder how this huge short position will be dealt with given the nearly 8 cents inversion between July and December.

The spread between current and new crop futures widened significantly after the USDA released its Prospective Plantings report yesterday morning. Trade shorts were hoping for a bearish report to force the market lower, but instead they got a fairly neutral 10.5 million acres number. Initially the entire board dipped in reaction to the report, but then current crop futures started to rally, while December stayed near unchanged. As the huge jump in open interest (+5'380 contracts) would later reveal, it was renewed spec buying that sponsored the rally.

As traders do the math on supply/demand numbers for 2010/11, they may realize that no matter how big the crop is going to be in the coming season, it will not help those who still need to buy cotton for delivery over the next six or seven months. Also, it will take a substantial rebound in production to close the 13.5 million bales seasonal output gap we currently have. Given the surprisingly strong consumer demand, we believe that this gap will increase to around 15-16 million bales next season. In other words, global production may have to grow from the current 102.2 million bales to around 117-118 million bales to keep stocks from falling any further.


Must ReadView All

Pic: Shutterstock

Textiles | On 31st Mar 2020

UN calls for $2.5-trn rescue package for developing world

The COVID-19 pandemic will drive the world economy into recession...

Pic: Shutterstock

Textiles | On 31st Mar 2020

India to extend foreign trade policy, schemes till Sep 30

India will reportedly extend the existing foreign trade policy...

Pic: Shutterstock

Textiles | On 31st Mar 2020

Bangladesh seeks $1 bn from IMF, WB to face COVID-19

Bangladesh has recently sought $1 billion in support from the...

Interviews View All

Cindy McNaull, Cordura

Cindy McNaull
Cordura

We have broad range of options in durable fabrics

Textile Industry, Head honchos

Textile Industry
Head honchos

Industry could be looking at 10%-15% job losses

Top executives, Textile industry

Top executives
Textile industry

Knowledge sharing platform needed for sustainable water management

Vasudevan LK,

Vasudevan LK

Epson is a world leader in digital imaging and printing solutions....

Michael Van Den Dolder,

Michael Van Den Dolder

Family-owned German textile machinery manufacturer Trützschler operates...

Martina Giorgetti,

Martina Giorgetti

Italy-based Cibitex is a manufacturer of textile finishing machinery,...

Johann-Philipp Dilo, Dilo Group

Johann-Philipp Dilo
Dilo Group

German company Dilo Group is one of the leading equipment suppliers of...

Razvan Popescu, Directa Plus SpA

Razvan Popescu
Directa Plus SpA

Directa Plus is one of the largest producers and suppliers worldwide of...

Eric Scholler, Groz-Beckert

Eric Scholler
Groz-Beckert

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

Wendell Rodricks, Wendell Rodricks

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Anjali Bhaskar, Samatvam

Anjali Bhaskar
Samatvam

Anjali Bhaskar has an experience of 12 years in the fashion industry. She...

Akta Adani, India Boulevard

Akta Adani
India Boulevard

India Boulevard is a San Francisco-based curated fashion marketplace that...

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


March 2020

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


Advanced Search