Cotton

[rakeshmalik]

The stock market also squeaked out a bit of a gain going into tomorrows Fed announcement on further interest rate cuts estimated between 25 and 50 basis points. Foreign markets were higher overnight and there does seem to be some consolidation at the 12,000 level in the Dow with some strong resistance above 12,500. Volume was average with 21,000 futures and 8,000 options as open interest rose over 3,000 contracts in yesterday's up move.

The spec long position came down to 25.3% after the recession meltdown correction in cotton as well as grains. We are still off the highs and looking for a retest that may not happen since the stock market will struggle to rally with all the housing uncertainty and recession fears.

This will be a challenge nearby with Chinese New Year and prices reaching unattractive levels to generate good demand. Cotton nearby needs to hold the 67.00 level but will have trouble breaking 70 cents.

The grains will dictate the short term price range and that will have a lot to do with the stock market and how much of a rally it can make after falling over 15% since the beginning of the year.

RSI is at 49 and prices are holding the low at the 50-day moving average near 67.00 as this trade channel should hold up short term. The grains and other commodities are finding some strength along with a weaker dollar. U.S. stocks were up today looking for further rate cuts at the Fed meeting on Wednesday, but we are still in a bear market as Asia and Europe have been flat nearby.

Demand remains slow, but this week should be a more friendly export report and the specs did lower their spec long position as well.

 

[rakeshmalik]

Special Reports


Indian cotton prices up on lower supplies
Indian cotton down on slow demand
Indian cotton prices up on strong demand,

 

[rakeshmalik]

Spot rate down by Rs 50 in lacklustre business
SHAFI AHMAD SYED
KARACHI (February 04 2008): The world cotton supplies and rates impacted trading in local market where they rose cautiously and finally on the reports that cotton arrival was seen prices took to favourable turn for the buyers. The spot rate held at Rs 3200 while rates in ready were seen between Rs 3200 and Rs 3350.

 

[rakeshmalik]

WORLD SCENARIO:

The futures fluctuated both ways on the NYCE cotton trading impacted by small speculators sales or buying, as major players were not one in speculating rates in coming days.

On Monday March showed gain of 0.41 cent to 68.30 and May up 0.46 to 70.16 cents a pound. In the absence of strong fundamentals, players saw market range bound as they depended on gyration on the grains market. Analysts were of the opinion that lint prices would need to rise further in order for American farmers to stick with cotton instead of switching this season to plant grains like soyabeans, wheat or even corn.

On Tuesday slight down drift was marked as most of the trade believed that China should pick up the pace of its purchases ahead of Lunar New year in the coming week, before mills close down for 10 to 20 days. Besides, players look on to Fed rate cut or the NC countries annual planting survey for sowing in 2008.

On Wednesday futures gained as USDA was expecting phenomenal surge in weekly export sales. However, most players are worrying and praying for returned good days for cotton.

On Thursday, ICE Futures' open-outcry March cotton contract fell 0.77 cent to end at 67.79 cents per lb, moving from 67.25 to 68.10 cents. May cotton droped 0.73 to 69.70 cents and the new-crop December cotton contract shed 0.63 cent to 76.40 cents.

ICE March electronic cotton futures slid 0.54 cent to 68.02 cents at 3:14 pm EST (2014 GMT), moving from 67.23 to 68.70 cents. On Friday ICE Futures' open-outcry March cotton contract rose 0.37 cent to end at 68.16 cents per lb, moving from 67.90 to 68.35 cents.

May cotton added 0.38 to 70.08 cents and the new-crop December cotton contract gained 0.29 cent to 76.69 cents.

ICE March electronic cotton futures increased 0.44 cent to 68.23 cents at 3:17 pm EST (2017 GMT), moving from 67.85 to 68.40 cents.

 

[rakeshmalik]

LOCAL TRADING:

The cotton market is passing through a couple of patterns leading to occasional surge in lifting by consumers and soaring prices. However, the change in world rate - scaling down and Indian exporters turn in to deliver Pak importers has hit local cotton. The spot rate was lowered to Rs 3150 while asking prices ranged between Rs 3150 and Rs 3350 per maund.

On Monday, firm prices had sidelined the hungry consumers but cheered by permission to import low mix cotton from India and in fact news that the delivery was to start soon brought them back to cotton market. Phutti had on the opening day a sale value at Rs 1400 to Rs 1500 in Sindh and Punjab.

But the following day it was raised by Rs 100 to Rs 1500, of course low type but better one was up Rs 50 to Rs 1550. In Punjab inferior rose by Rs 50 to Rs 1550 while better one rose by Rs 75 to Rs 1625. Nearly 4000 bales deals were finalised.

On Tuesday, phutti prices were sharply higher as low type in Sindh was up by Rs 100 at Rs 1500 and better type was higher by Rs 50 to Rs 1550. In Punjab it followed suit and gained Rs 50 for low quality at Rs 1500 and good type picked up Rs 75 to Rs 1625.

The deals were reported :2400 bales from Rahim Yar Khan at Rs 3350, 600 bales from Sadiqabad, 600 from Khanpur at the same rate and 1400 bales from Dadu at Rs 320

On Wednesday spot rate was put at Rs 3200 while deals in ready was marked around eight to ten thousand bales. Market sources hoped trading will pick up with every passing day. On Thursday, no business was seen as both ginners and spinners kept on the sidelines.

On Friday, official spot rate was down by Rs 50 to Rs 3150 amid rising expectations by the spinners to import better quality of cotton at cheaper rates, experts said. The following deals were reported as some 1600 from Dadu sold at Rs 3150 and 1000 bales from Chistian at Rs 3175-3200.

On Saturday, mills were not much active as most of them were hoping that prices will come down more in expectations of import of good quality of cotton at the lower rates, in Sind phutti prices were at Rs 1500-1550. A solo deal was finalised at Rs 200 bales from Mirpur Khas at Rs 3215.

 

[rakeshmalik]

China: Power Shortages Worsen - Will Impact Textile Output
[ News Desk 28/01/08]

China: Power Shortages Worsen - Will Impact Textile Output
China's power shortage is getting worse, surpassing the crisis in the summer of 2004 when nationwide shortages of electricity reached over 40 gigawatts, causing many industrial plants, including textile operations, to install their own generators and power plants. The current deficiency in electricity is now reaching record levels and appears to be a much larger crisis that will likely impact more plants and operations. Thirteen provinces are now being affected by a severe electricity shortage. By January 23, 2008, the demand for electricity had outstripped supply by 70 gigawatts; and currently, the shortage is at the equivalent of the United Kingdom's total generating capacity.

The problem is not electricity-producing capacity as it was in 2004; instead, it appears to be linked to two elements. The first is a severe shortage of coal. Over 70 percent of all power in China comes from coal plants; and due to surging demand, the country has now become a net importer of coal. In 2007, coal imports jumped 33 percent with net imports of 2 million tons; and in 2008, imports are expected to reach 15 to 18 million tons. The price of coal has surged as a result. In addition, there are reports of problems with transportation logistics. The government is now reporting a shortage of coal. The State Grid, which produces 70 percent of all electricity, reports a coal supply of 17.7 tons, which is down 40 percent from a year ago and equates to only 8 days of use. As of January 23, 2008, the Central Power Grid had coal stocks of only 5.57 million tons, which are half its normal stock levels. China's recent snowstorms have impacted coal stocks, as road transport has been disrupted.

The second factor impacting the power shortage is the lack of a coordinated free market. The domestic price of coal is freely set by supply/demand of the market; however, the government sets electricity prices. Many of the new power plants are privately-owned; thus, the rise in coal prices and the government's refusal to raise electricity costs has led to power plants shutting down capacity in order to control losses. Many power plants have been running at a loss with current coal prices. The government has been reluctant to allow electricity costs to increase because of its desire to control inflation.

The impacted provinces include the textile-producing provinces of Hunan, Hubei and Guangdong, along with ten other provinces. These conditions will likely impact overall industrial output if the situation persists.

 

[rakeshmalik]

U.S. Pima Exports Strong Despite Larger Global Supplies
It appears the weaker global ELS prices have stimulated increased mill consumption and triggered a willingness of mills to extend cotton inventories. As a result, export offtake of both U.S. Pima and Egyptian styles have been extremely strong. As of January 10, 2008, U.S. Pima export registrations had reached 535,000 running bales, which was up sharply from year-ago levels of 301,700 bales. Shipments were also rather healthy at 275,800 running bales versus only 148,600 bales at the same point last season. Pakistan, China, India, Indonesia and Japan have been the top buyers.




Two factors stand out. First, China is the second largest customer of U.S. Pima, taking 84,400 bales, compared to year-ago sales of 30,800 bales. These purchases have occurred despite the glut of domestic ELS supplies in China and the weak domestic prices. This demand is being driven by the quality requirements of Chinese mill customers and the success of the Pima Brand ID program with retailers.





The second feature is the strong demand from both Pakistan and India. Pakistan has been the top buyer of U.S. Pima at 101,700 running bales, while India has purchased 84,400 bales. This demand for U.S. Pima has also coincided with major purchases of Egyptian styles. As of January 19, 2008, total Egyptian export sales have reached a very impressive 106,213.5 tons or the equivalent of 487,998 480-pound bales. India and Pakistan were the top two buyers as well, with India purchasing 36,024.65 tons and Pakistan buying 31,703 tons. This purchase volume suggests that mills in both countries are now well covered and that ELS consumption in both regions has expanded.

 

[rakeshmalik]

China: Indian Cotton Dominates December 2007 Imports
[ 28/01/08]

China: Indian Cotton Dominates December 2007 Imports
China imported 322,575 tons of cotton in December 2007. Indian cotton dominated this volume at 186,558 tons, up 89.9 percent from the previous year, while total 2007 cotton imports reached 632,907 tons. U.S. December cotton imports came in second at 62,110 tons, while total 2007 imports reached 1,123,915 tons. Uzbekistan, Australia and West Africa were the other major import origins.

 

[rakeshmalik]

Pakistan: Local Prices Rally [30-1-2008]
Turnover in Pakistan's domestic market has slowed this week, with most of the activity focused on lower-grade lots, which are widely used by mills for blending with polyester to produce cotton-blend yarn and fabric. Higher-quality lots reached 3,300 to 3,350 rupees per maund by the end of the week (approximately 64.50 to 65.34 U.S. cents per pound). This price represents a gain from 3,265 to 3,330 rupees that prevailed a week ago or approximately 63.81 to 64.50 U.S. cents per pound. Increased mill interest in imported high grades was also noted.

 

[rakeshmalik]

Cotton futures move up slowly
Mumbai - Cotton was seen extending small gains of the last weekend, as it was moving up slightly amid cautious speculative buying during initial trade on both the domestic exchanges Monday