Plexus Cotton Limited reports that New York futures made a big move to the upside over the holidays, with March gaining 750 points since December 22 to close at 94.74 cents.
After closing at 85.12 cents on December 14, the market has rallied an impressive 962 points over the last 14 sessions. However, while this move looks quite constructive on the chart, the fact that open interest has been declining sharply on Tuesday and Wednesday should be seen as a warning sign. Typically a powerful uptrend is validated by strong volume and rising open interest, which signals that a trend has momentum.
Surprisingly, open interest increased by only 1'531 contracts since December 14, which is not what we would expect to see in a ten cents move. Even more disappointing is that March open interest decreased by 7'880 lots, with most of this drop happening over the last two sessions.
This indicates that it was primarily short covering and profit taking that fueled the last four cents of the advance. Once the shorts are done covering, the buying will have to come from some other source, otherwise upside momentum will stall.
A lot of the short covering seems to be tied to the selling of physical cotton. When basis-long positions get sold to mills, merchants buy back the futures short that was hedging the physical long position.
Read entire post NY cotton futures leap over holiday period @ Fibre2fashion
Bremen Cotton Exchange says cotton deliveries for near dates or by December the latest were of interest for the spinning industry on the domestic market. Just slightly decreasing prices, the impact of cheap import yarns as well as existing stocks continuously led to a wait-and-see-attitude of the processor.
The prices have not yet reached the level where spinning industries satisfy their long-term demand; maybe hopes for dropping prices in the future have played a role, too. Due to the unsecure economic development in Europe there was hardly any stimulation by further steps of the textile chain in general. Contracts were only closed at fitting prices and for the satisfaction of current orders.
Read entire post Prompt Delivery Preferred - Bremen Cotton Exchange @ Fibre2fashion
Sustaining cotton’s place in the world requires taking steps to assure that the social, environmental, and economic aspects of cotton production are sustainable in each country.
Mr. Wallace Darnielle, President and CEO of Plains Cotton Cooperative Association, presented a report on sustainability of cotton production. Cotton removes the equivalent of about 7 million cars’ carbon dioxide emissions from the air each year through sequestration of carbon into the plant and its products, and it uses less than 3% of all agricultural water consumption globally. Contrary to claims made by some, cotton accounted for 6.8% of world pesticide use in 2008, and cotton production has reduced insecticide active ingredient use by 23% globally since 1996, leading to a 28% decrease in environmental impact.
U.S. cotton manufacturers use 45% less water to grow a kilogram of cotton today than 25 years ago. Conservation tillage has greatly reduced soil erosion. Insecticide applications declined by 50% since 1996, helped by the use of biotechnology and other modern technologies. In Texas, the cotton industry sustains about 25,000 direct jobs, and many more in supporting industries and trades.
All jobs comply with minimum wages and social benefits mandated by local laws. In order to support employment in rural areas globally, production of cotton fibres and other natural fibers should be promoted rather than production of man-made fibers, which are produced in capital-intensive industries dependent on non-renewable resources.
Economic sustainability of cotton production is constrained by farm prices and the costs of production, and demand at the retail level. Biotechnology has improved yields and qualities, but advances in drought and salt tolerance varieties and in nutrient absorption will further improve the economic sustainability of cotton production. On the demand side, promotional efforts of cotton should be upscaled worldwide to improve the economic sustainability of cotton production.
World cotton production in 2010/11 is forecast at 117.0 million bales, up 16 percent from a year. Rising global cotton prices and improvements in credit availability have resulted in higher area in several major cotton producing countries.
World cotton area in 2010/11 is forecast at 32.9 million hectares, up 9 percent from the previous year and similar to the pre-crisis cotton area. Global cotton yield is forecast at 774 kg/ha, up 6 percent from the previous year. Yields are forecast higher in India and the United States the world’s second and third largest cotton manufacturers and also in Brazil and Uzbekistan, due to more favorable growing conditions.
In Australia, 2010/11 cotton area is now expected to increase to 375,000 hectares, up 88 percent from last season. The area forecast the highest in almost a decade is attributable to favorable world prices and ample supply of water from rainfall. Australia’s 2010/11 production is forecast to nearly double to 3.0 million bales from the previous year.
China, India, the United States, Brazil, and Uzbekistan are expected to increase production in 2010/11 by 2 percent, 12 percent, 55 percent, 31 percent, and 23 percent, respectively, to 32.5 million bales, 26.0 million bales, 18.8 million bales, 7.0 million bales, and 4.8 million bales. Pakistan’s production of 9.3 million bales is slightly below last season, but is revised down 9 percent from the July 2010 estimate, reflecting damage from the recent floods.
