Cotton

Commodity Futures Price Quotes For
NYBOT Cotton #2
(Price quotes for NYBOT Cotton #2 delayed at least 30 minutes as per exchange requirements)

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Month
Click for chart Session Pr.Day Options
Open High Low Last Time Sett Chg Vol Sett OpInt
Cash - - - 73.81 * Feb 25, 09:53 - - - - - n/a
Mar 08 86.00 86.00 85.00 85.00 Mar 06, 09:17 - -2.25 12 87.25 832 Call Put
May 08 89.00 89.36 85.28 85.28 Mar 06, 11:09 - -4.00 37155 89.28 147190 Call Put
Jul 08 90.50 90.95 87.11 87.11 Mar 06, 11:11 - -4.00 23279 91.11 50520 Call Put
Oct 08 92.15 93.00 89.70 89.73 Mar 06, 11:03 - -3.78 149 93.51 1800 Call Put
Dec 08 94.00 95.20 91.53 91.53 Mar 06, 11:08 - -4.00 21684 95.53 85470 Call Put
Mar 09 96.74 96.87 93.57 93.57 Mar 06, 10:53 - -4.00 669 97.57 7097 Call Put
May 09 97.25 97.25 94.44 94.44 Mar 06, 11:01 - -4.00 57 98.44 465 Call Put
Jul 09 97.55 97.55 97.55 97.55 Mar 06, 07:36 - -0.70 81 98.25 803 Call Put
Oct 09 - - - 98.35 * Mar 05, 17:02 - - 3 98.35 58 Call Put
Dec 09 98.00 98.00 94.50 94.50 Mar 06, 11:06 - -4.00 380 98.50 2240 Call Put
Mar 10 - - - 100.50 * Mar 05, 17:02 - - - 100.50 50 Call Put
May 10 - - - 101.00 * Mar 05, 17:02 - - - 101.00 - Call Put
Jul 10 - - - 101.72 * Mar 05, 17:02 - - 2 101.72 1333 Call Put
Oct 10 - - - 101.92 * Mar 05, 17:02 - - - 101.92 5 Call Put
Dec 10 - - - 101.72 * Mar 05, 17:02 - - - 101.72 35 Call Put

NYBOT Cotton #2
(Price quotes for NYBOT Cotton #2 delayed at least 30 minutes as per exchange requirements)

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Month
Click for chart Session Pr.Day Options
Open High Low Last Time Sett Chg Vol Sett OpInt
Cash - - - 73.81 * Feb 25, 09:53 - - - - - n/a
Mar 08 - - - 81.68 * Mar 06, 17:36 - - - 81.68 - Call Put
May 08 83.55 83.55 81.28 81.28 Mar 07, 11:39 - -4.00 15672 85.28 144516 Call Put
Jul 08 85.11 85.11 83.11 83.11 Mar 07, 11:53 - -4.00 12452 87.11 50082 Call Put
Oct 08 86.00 86.00 86.00 86.00 Mar 07, 10:51 - -3.51 36 89.51 1778 Call Put
Dec 08 88.99 88.99 87.53 87.53 Mar 07, 11:37 - -4.00 11927 91.53 85189 Call Put
Mar 09 92.00 92.00 89.58 89.80 Mar 07, 11:36 - -3.77 121 93.57 7054 Call Put
May 09 90.50 90.50 90.44 90.44 Mar 07, 10:59 - -4.00 42 94.44 457 Call Put
Jul 09 - - - 94.81 * Mar 06, 17:36 - - 36 94.81 835 Call Put
Oct 09 - - - 94.91 * Mar 06, 17:36 - - 9 94.91 67 Call Put
Dec 09 90.50 90.65 90.50 90.50 Mar 07, 11:52 - -4.00 835 94.50 2400 Call Put
Mar 10 - - - 96.50 * Mar 06, 17:36 - - - 96.50 50 Call Put
May 10 - - - 97.00 * Mar 06, 17:36 - - - 97.00 - Call Put
Jul 10 - - - 97.72 * Mar 06, 17:36 - - - 97.72 1333 Call Put
Oct 10 - - - 97.92 * Mar 06, 17:36 - - - 97.92 5 Call Put
Dec 10 - - - 97.72 * Mar 06, 17:36 - - - 97.72 35

Delay in cotton supply by India: textile, commerce ministries to hold meeting soon
ASMA RAZAQ
ISLAMABAD (March 08 2008): The ministries of textile and commerce will soon meet to decide about how to take up the matter with India regarding delay in supply of cotton to Pakistan, sources told Business Recorder here on Friday.

"Tempted by sudden price hike in the international market, Indian traders have delayed shipment of cotton which, according to delivery schedule, were to reach Pakistan by mid-February," sources said.

They said that decision will be taken in a meeting, to be attended by officers from the textile and commerce ministries and all stakeholders. Local agents of Indian traders are also expected to attend the meeting, they added. However, the date for the meeting has not been finalised yet, but it is certain that it would be held within a few weeks, sources said.

There are three options for government's consideration to the solution of this problem as to whether Indian High Commission should be approached, or the Indian Cotton Association or Indian Textile Ministry should be approached. The textile industry had planned to import four million bales long staple cotton from USA and Brazil and another four million bales of short and medium staple cotton from India.

Cotton prices in international market have touched all time high as the ICE Futures May contract has settled up 3.00 cents, the daily price limit, at 84.86 cents per lb while the new-crop December cotton contract also settled 3.00 cents higher at 90.45 cents. Influenced by the high prices of cotton in international market, the prices per maund in the local market have gone up beyond Rs 3500.

"Delay by the Indian traders in cotton supply has created a lot of problems as we are already behind our textile export target set for 2007-08. The government has fixed $11.40 billion textile export target for 2007-08 as compared to $10.40 billion of last year. But, unfortunately, our textile exports are experiencing a shortfall of 5 percent as compared to the same period last year", sources said.

"This clearly shows that we may miss the textile export target for the current fiscal year and now the delay in cotton supply from India has added to the textile industrialists' problems", sources added. Indian traders' delay in cotton supply is against the business ethics and it will certainly effect the Indian business reputation in international market as well, the sources observed.

Bonkers, Parabolic, Rocket in My Pocket, Disconnected…Other words are difficult to come by this week; a week drenched with market activity that had never before been experienced; one that had never wittinessed so much confusion, panic and greed. The cotton industry received a full dose of the economic principles of laissez-faire …a dosage so large that some corners will demand government action; a week when some major international merchants threatened to withdraw from New York trading; a week that saw dollar cotton and little, if any, opportunity for the cotton growers to take advantage of such prices. Of course many other stories could be told, but those will suffice for today.

Laissez-faire, the French phrase meaning something like, “let it be,” or “leave it alone,” or “let the market do as it wants,” or maybe just “get out of the way—here comes a bucketful of big trucks, trains and tankers if you feel big enough to stand in front of them.”

This week’s action, while expected, came a bit faster and with much more staying power than expected. Too, the sell off at week’s end should have been of no surprise. I address some of that at the end of today’s newsletter, but for now let’s talk about price expectations.

The New York December contract has returned to the mid to high 80’s, a price I feel is well deserved. In fact, a return to the low to mid 90’s is in front of us. Nevertheless, there is ample cotton available to the market to allow the nearby May and July to slip back to the high 70’s, although after this week’s activity the low 80’s will probably hold.

Another reason that will keep both the May and July above 80 cents, and move the December to the mid 90’s is the unfixed call sales versus the unfixed call purchases. The positions remain so lopsided with respect to call sales (buying futures) that the market will find solid support and will also remain very volatile with a preference to move higher. Many have had a tendency to view call sales as a single total number for all futures trading months. However, to correctly view the potential market impact, one must view the report with respect to each contract month.

While few growers were able to take advantage of this week’s price increase, they now have a feel for the price potential of the 2008 crop. Thus, this week’s rally did, in fact, buy more acres to be planted to cotton this year. Compared to the 9.0 million acres expect just a week ago, 2008 plantings will likely approach 9.8 million. The Texas dryland will almost certainly be planted to cotton, forsaking grain sorghum. Dryland cotton will need only one rain while the dryland grain sorghum would need two or three to make anything. Additionally, the MidSouth will increase their intentions at the margin. However, the Midsouth had sold so much of its cotton specific equipment that the acreage impact will likely be no more than 200,000 acres. The Southeast will also see a 200,000 acre increase above earlier intentions. Cotton is even taking some peanut acres in Georgia. Georgia growers can contract peanuts, but switch their land to cotton without any penalty. Too, peanuts would have to climb another $150 to $250 per ton to compete with 85-90 cent cotton. With prices for California Upland cotton approaching prices for Pima, some California growers will opt for more Upland and less Pima.

The market has settled its stomach for now. It is time for cotton fundamentals to dictate activity, but don’t discount the impact the soybean and grain complexes will have on cotton prices. However, if the call sales report for the May contract remains unbalanced as we approach first notice day for May futures, then the fireworks display will light up again.

The short term remains just a shade bearish, but the long term is higher and higher. The one dollar price barrier will fall with just the slightest gush of wind.

The monthly AgMarket Network teleconference will be Thursday morning at 7:30 AM. Please join us.

The April AgMarket Network teleconference, April 2, will be a week earlier than normal and will be live. Lubbock area growers should make plans to attend that one in person.

What Happened
The fact that the cotton market rocketed higher should not have been a surprise to anyone. However, the fact that the near term 2007-08 marketing year May and July contracts led the way all week was a minor surprise. The fact that the back end contracts moved to the mid 90’s, and even above the dollar level, should not have been surprising. Too, the rapid and unrealistic rise should have been a solid warning that so much air was left under the market that Thursday and Friday’s limit down activity was expected.

The fun began last Friday as funds continued to soak the market with massive buying. Some merchants smelled a blow off coming in price activity and covered their short hedge positions by buying back their futures positions (called short covering). (In this case the action taken by merchants was speculative as they lifted their short positions in order to escape margin calls and take advantage of a rapid price advance.) This additional buying by merchants left no natural sellers (hedgers) in the market and opened a free for all price explosion that continued into Monday and Tuesday as more and more merchants began to lift their hedges. Essentially all cash merchandising activity came to a halt as merchants had no confidence that they could honor a 2008 crop forward contract, and thus refused to contract with growers. With growers not able to forward contract they were left out of the dollar cotton party.

Lesson One For The Cotton Grower Again….A few growers did use the options market to secure dollar cotton contracts, but only those who had developed an understanding of the futures and options activity. Don’t worry….you will have that opportunity to learn that lesson again….just remember the market, like this time, will give you absolutely no time to learn and no warning…it will just happen again…take the lesson now….

Make no mistake about it. The past week was a rough and difficult week for many cotton merchants…one that effected growers and textile mills…one that we must hope is not repeated. However, the rules that allowed the market to literally become a wild west shoot out, are the same rules that the merchant dominated board of directors of the cotton exchange both wanted and lobbied for enactment. Those harmed by the market rules fell victim of the board’s decision to limit delivery points and to limit warehouse space for certificated stocks. The cotton market is no longer the gentleman’s market. It is a dog- eat-dog market. But after all, we are now in a global marketplace. Thus, nothing should come as a surprise….not even that the New York market failed to fulfill its sole economic purposes this past week, namely 1) provide for price discovery and 2) provide a mechanism for the transfer of price risk. To those that want to argue otherwise, don’t insult your own intelligence.

NYBOT Cotton #2
(Price quotes for NYBOT Cotton #2 delayed at least 30 minutes as per exchange requirements)

Click here to refresh data

Month
Click for chart Session Pr.Day Options
Open High Low Last Time Sett Chg Vol Sett OpInt
Cash - - - 73.81 * Feb 25, 09:53 - - - - - n/a
Mar 08 - - - 81.68 * Mar 06, 17:36 - - - - - Call Put
May 08 78.22 78.22 77.28 77.28 Mar 10, 13:39 - -4.00 9816 81.28 143738 Call Put
Jul 08 81.70 81.70 79.11 79.11 Mar 10, 13:35 - -4.00 4918 83.11 50656 Call Put
Oct 08 83.70 83.95 83.27 83.27 Mar 10, 12:20 - -2.31 620 85.58 1991 Call Put
Dec 08 85.10 85.99 83.53 83.70 Mar 10, 13:51 - -3.83 5858 87.53 84746 Call Put
Mar 09 86.70 87.35 86.20 86.55 Mar 10, 13:31 - -3.15 325 89.70 7150 Call Put
May 09 - - - 90.44 * Mar 07, 17:12 - - 34 90.44 471 Call Put
Jul 09 - - - 90.81 * Mar 07, 17:12 - - 47 90.81 825 Call Put
Oct 09 - - - 90.91 * Mar 07, 17:12 - - - 90.91 67 Call Put
Dec 09 88.25 88.53 88.00 88.00 Mar 10, 13:42 - -2.91 179 90.91 2438 Call Put
Mar 10 - - - 92.91 * Mar 07, 17:12 - - - 92.91 50 Call Put
May 10 - - - 93.41 * Mar 07, 17:12 - - - 93.41 - Call Put
Jul 10 91.00 91.00 91.00 91.00 Mar 10, 10:38 - -3.13 - 94.13 1333 Call Put
Oct 10 - - - 94.33 * Mar 07, 17:12 - - - 94.33 5 Call Put
Dec 10 - - - 94.13 * Mar 07, 17:12 - - - 94.13 35 Call Put

CNCE Forward trading: Market ended mixed
03/11/08

COTTONCHINA11880 tons were concluded on CNCE??s e-market, 2620 tons more than the previous session. All cotton traded today were Type 229, open interests reduced 320 tons and cumulative open interests totaled 117580 tons.

Market open lower then fluctuated to higher. Most MA contracts settled higher except MA0803 and MA0802, MA0804 settled unchanged. Volume traded today increased greatly, which was 30% more than the previous session. MA0803 lost by 16 yuan to 14396 yuan, MA0805 gained by 54 yuan to 14794 yuan.

Daewoo International to take over Uzbek cotton mill




TASHKENT, Mar 10, 2008 (Asia Pulse Data Source via COMTEX) -- Daewoo International, one of South Korea's leading global trading companies, said Sunday that it has recently decided to invest about US$47.5 million (roughly 45.4 billion won) to take over Bukharatex, a top-class yarn and fabrics firm in Uzbekistan.

The board of directors gave the go-ahead to the takeover after the company's President and CEO, Kang Young-won, reached an agreement in principle with Uzbek President Islam Karimov, who visited Seoul late last month, a company spokesman told the Korea Times.

Daewoo International has already been operating two textile companies in Uzbekistan ? Daewoo Textile Company (DTC) and Daewoo Textile Fergana (DTF).

"We made the latest decision after a feasibility study at the request of the Uzbek government, which was satisfied by the successful operation of DTC and DTF and asked for additional investment," the spokesman said.

Daewoo International will use the US$47.5 million to set up Daewoo Textile Bukhara (DTB) soon and expand production facilities there. The company expects that the annual sales could exceed US$35 million.

"Along with DTC and DTF, the new firm will allow Daewoo International to become the unrivaled leader of the textile industry in the Central Asian country," another company official said.

Daewoo International has been engaged in various resource development projects overseas in Myanmar, Azerbaijan and Canada as well as Uzbekistan.

Last month, the general trading company signed a deal with Uzbekistan's state-run energy firm Uzbekneftegaz to develop two mines in the northwestern region of the country.

China Cotton Index
(CC Index)

(RMB YUAN/MT) more>>
Date Index Change
03/18/08 13847 0
03/17/08 13847 -2
03/14/08 13849 -2
03/13/08 13851 +1

ZCE Trading for March 17
03/17/08
CNCE Forward trading: Market decline and volume increased 4320 tons
03/17/08
ZCE Trading for March 14
03/14/08
CNCE Forward trading: Market still weak
03/14/08
ZCE Trading for March 13
03/13/08
CNCE Forward trading: Volume reduced sharply
03/13/08

China to Grant 1.5mn Tons More Foreign Cotton Quota




BEIJING, Mar 18, 2008 (SinoCast China Financial Watch via COMTEX) -- China reportedly is to grant a 1.5-million-ton foreign cotton import quota in the near future, an effort to meet the demands from the domestic market, said people close to the China Cotton Association (CCA) and the National Development and Reform Commission (NDRC).

However, the nation's regulators have not given a nod to the quota, the people added. China manages the cotton import via the quotas. In October 2007, NDRC, the nation's macro-economy regulator under the State Council, the nation's cabinet, approved an 894,000 tons tariff quota for 2008 cotton import, 33% to the state companies.

Besides the tariff quota, the regulator is scheduled to grant sliding duties quotas in 2008, step by step, according to the domestic demands and the situation of the world cotton market.

The sliding duties rate of imported cotton in 2007 was 6% to 40% and the figure in 2008 is rumored to be adjusted to 5% to 40%, according to a professional industry information provider in the country.

China is the biggest cotton consumer in the world. In 2007, the country had a yarn output of 19.956 million tons and a cotton output of 7.8 million tons, which catapulted the country into a leading position all over the world. However, the output can not meet the huge demand of the domestic textile industry. China has to purchase a great amount of cotton from foreign countries. Although the cotton import suffered continuous declines in 2007 and at the beginning of 2008, the nation still remains the No. 1 cotten buyer around the world.

For the full year 2007, China imported 2.4608 million tons cotton, falling 32.5% from the previous year. And in January 2008, the cotton import was 157,700 tons, running down 164,900 tons or 51% month on month from 322,600 tons, but up 34,600 tons or 28.11% year on year from 123,000 tons, according to the China Customs.

The main reasons for the month-over-month fall in cotton import are the foreign cotton's blunter edges over price, the slower export growth of Chinese textile products and garment to the US and Europe, as well as the decreasing demand for cotton, showed a report by the national Ministry of Agriculture.

Since September 2007, many cotton importers in China have not bought cotton from foreign countries, due to the relatively higher costs. Because of this, the nation's cotton import has plunged 33%, compared with the period in the prior year.

(USD 1 = CNY 7.08)