Cotton

[rakeshmalik]

New York cotton falls to 11-month low
NEW YORK (August 05 2008): Cotton futures dropped to their lowest levels in nearly a year on Monday as investment funds continued to liquidate holdings in the wake of a broad-based sell-off in commodities. The key December cotton contract lost 2.76 cents by the close to finish at 69.13 cents per lb, its lowest settlement since September 7.

The session range ran from 69.04 to 72.38 cents. Volume traded in the December contract stood at 22,904 lots at 3:09 pm EDT (1909 GMT). Cotton market succumbed to broad-based selling pressure in the larger commodity complex, led by a sharp retreat in the price of crude oil. "There just seems to be an easy willingness of these funds to liquidate," said Keith Brown of Keith Brown and Co in Moultrie, Georgia.

"Cotton is so easily swayed by outside markets," Brown said. Cotton market fails to react to possible threats to the Texas crop from Tropical Storm Edouard. Edouard moved across the northern Gulf of Mexico on Monday and has a 20 percent chance of hitting the Texas-Louisiana coast as a hurricane, US forecasters said.

"Low winds and decent rain would be beneficial to the crop," added Brown. Looking ahead, all eyes will be on the August 12 release of the US Agriculture Department's monthly supply/demand report. The report will give the market a first detailed look at major crops like cotton in the 2008/09 marketing year (August/July).

Brokers Flanagan Trading Corp sees resistance in the December contract at 72.50 and 73.60 cents, with support at 69.35 cents. Volume traded on Friday reached 21,932 lots, exchange data showed. Open interest in the cotton market increased by 2,121 lots to 224,174 contracts open as of August 1, exchange data showed.

 

[rakeshmalik]

Spot rate further rise by Rs 50 amid slow trading

KARACHI (August 06 2008): Further increase was seen in the official spot rate amid sluggish business on cotton market on Tuesday, dealers said. The official spot rate after a gap of short time, started upward march gaining Rs 50 to Rs 4200 due to short supply of phutti, they said. They also said that in Sindh, phutti (low quality) was trading at Rs 1700-1750, while no transaction was seen in the Punjab.

According to the market sources, sporadic buying by the mills was witnessed during the slow arrival of phutti. They said that due to strike by the ginners, business was still nearly thin and it is expected that meeting between the ginners and the government may help in putting off strike as early as possible. Commenting on the lean business, they also said that some mills were active and indulged the panic buying despite the higher rates.

They have to meet their export commitments and they can't wait despite the falling trend in the NY cotton market. Recent rains are favourable for the cotton crop and giving an impression that less damages are likely by the farm diseases, some brokers said. On Monday, the NY cotton futures dropped to their lowest levels in nearly a year as investment funds continued to liquidate holdings in the wake of a broad-based sell-off in commodities.

The key December cotton contract lost 2.76 cents by the close to finish at 69.13 cents per lb, its lowest settlement since September 7. The session range ran from 69.04 to 72.38 cents. Volume traded in the December contract stood at 22,904 lots at 3:09 pm EDT (1909 GMT).

THE FOLLOWING DEALS WERE REPORTED: some 200 bales of cotton from Burewala sold at Rs 4250, same figure from Pakpattan at Rs 4300, same figure from Khanewal at the same rate, same figure from Sanghar at Rs 4250 and same numbr from Hyderabad at the same rate, dealers said.

 

[rakeshmalik]

Cotton prices cruising at optimum level

LAHORE (August 08 2008): Cotton prices continued to climb upward this week without any let or hindrance and they attained their apogee of Rs 4,300 per maund (37.32 kgs) a couple of days ago.

Fear of possible decrease in current crop (2008-2009) size due to lesser planting by about 10 percent compared to earlier government target of 14.10 million bales (170 kgs), floods and monsoon rains with increasing intensity over the past couple of weeks coupled with apprehensions of whitefly attacks, mealy bug and other pest infestation have all added up to caution the trade regarding the crop size we may attain.

Furthermore, a strike call by the Pakkstan Cotton Ginners Association (PCGA) to stop pressing cotton from the 1st of August 2008 has also influenced the price sentiment in the cotton market on the bullish side. The chairman of the PCGA, Muhammad Akram Jutt, said in Multan recently that the ginners are striking in protest indefinitely till their demands are met which include withdrawal of extra taxes and restoration of all facilities which were promised to them under an agreement with the government back in 1991-92.

Be that as it may, the result of the ginners strike struck down daily pressing of current crop (2008-2009) cotton from an estimated 7,000 bales at the end of last month to about 2,000 bales per day now. Trade is watching intently the stamina of the ginners and co-operation of its members in sustaining their strike till all their demands are met.

Recent reports said that a crucial meeting of the ginners with high government officials to sort out the problems was postponed by the government functionaries which has infuriated the ginners. Therefore, the stalemate regarding the operation of the ginning factories was said to be continuing at the moment.

In the meantime, the dilly-dallying of the coalition partners of the government is casting dark shadows on the political horizon of Pakistan. Incursion of foreign elements into the north west of Pakistan and also domestic insurgency in some of those areas is adding uncertainty into the efficacy of the government in no uncertain terms.

The bourses in Pakistan have nose dived an estimated 40 percent from their peak values earlier in the year despite some official corrective measures. In this context, the domestic textile industry continues to languish in unending problems and indeed the overall economy of Pakistan is being dragged into the mire of untold difficulties and despondency.

With the government still attending to the unending political problems at hand, the cotton economy at large from the growers to the spinners, weavers and finishers of textile materials and garment makers are facing dire problems.

Regarding crop size (2008-2009) the private traders said in the evening that total output could vary between 11.5 million and 12 million bales on an ex-gin basis under normal circumstances.

However, overcast skies, low to medium floods in the rivers and water filled till the brim in major dams like Mangla and Tarbela present some worries in case the rain continues and the precipitation breeds bugs and extra weeds in the cotton fields which could conceivably lower the lint output this season and also damage the quality.

Earlier in the day, seedcotton (kapas/phutti) prices in Sindh were said to have ranged from Rs 1,850 to Rs 1,950 per 40 kgs, while in the Punjab they were normally reported to have ranged from Rs 1,950 to Rs 2,000 per 40 kilogrammes.

Lint prices in Sindh which were said to have eased in the evening generally ranged from Rs 4,175 to Rs 4,200 per maund (37.32 kgs), while in the Punjab they reportedly ranged from Rs 4,250 to Rs 4,275 per maund. In actual sales in Sindh, 200 bales from Sanghar sold at Rs 4,175 per maund. in ready business from Punjab, 300 bales each from Harrapa and Khanewal were said to have been sold at Rs 4,275 per maund.

Later in the evening, news started trickling in that ginners in Sindh had opened their factory gates to allow seedcotton to be received which initial tidings indicated that the Pakistan Cotton Ginners Association (PCGA) strikes could be negated or possibly called off soon. Further details were not available at the time of filling of this analysis.

There remains the possibility that with increasing seedcotton arrivals in both Sindh and Punjab when the current season (2008-2009) goes into full swing, lint prices may restrain their hitherto propensity for higher levels. In the meantime, a report received in trading circles in the evening said that a meeting has been scheduled between the chairman of the Federal Board of Revenue (FBR) and the Pakistan Cotton Ginners Association (PCGA) to tackle the issues irking the ginning community.

However, Pakistani rupee having slipped to it's lowest level against the United States dollar touching Rs 73 against the greenback this week, lint prices could again attempt new heights some time in future because they are designated in Pakistani rupees.

We may recall that from the beginning of this month lint prices started rising from Rs 4,200 to Rs 4,300 per maund on Tuesday, the highest recorded in the history of Pakistan.

In concordance with recent increases in lint prices, the Karachi Cotton Association (KCA) likewise increased its ex-gin price of grade three cotton to a record Rs 4,250 per maund on Thursday. however, sentiment was relatively easier in the evening. Pakistan is celebrating its 61st Independence Day on the 14th of August 2008 on next Thursday which will be a public holiday.

 

[rakeshmalik]

Bullish trend on cotton market

KARACHI (August 08 2008): Higher trend was seen on the cotton market on Thursday as spot rate showed further rise owing mainly to short supply, dealers said. The official spot rate again raised by Rs 50 to Rs 4,250 amid strong demand for cotton by the mills, they added. In the ready business, the phutti prices in Punjab were at Rs 2,000-2,025 and in Sindh, the rates were at Rs 1,850-1,950, they said.

According to the market sources, ginners strike prolonged, which caused sluggish business and rising trend in the prices. In the meantime, the phutti arrivals were in slow pace as recent rains are beneficial to the crop but if the rains continued for a long time, it may cause some damages to the standing crop.

There was no comment on the ginners strike but it is likely that they may not end strike very soon, they added. Meanwhile, some ginners were selling their unsold stock owing to lucrative rates as phutti arrivals have started and the pace of arrivals will increase with the passage of time, they said.

On Wednesday, the NY cotton futures closed up as prices extended a phase of consolidation near the 69-cent level, and players expected further sideways type price action ahead of next week's USDA supply/demand report.

Cotton for December delivery finished up 0.53 cent at 69.56 cents per lb. The session range spanned from 69.02 to 70.20 cents. Volume traded in the December contract stood at 7,652 lots at 2:58 pm EDT (1858 GMT).

The following deals reported as some 200 bales of cotton from Tando Adam sold at Rs 4,225, 100 bales from Shahdadpur at Rs 4,200, 200 bales from Pir Mahal at Rs 4,300, 400 bales from Pakpattan at Rs 4,275-4,300, and 200 bales from Khanewal at Rs 4,285, dealers said.

 

[rakeshmalik]

World cotton production to fall 5pc
7 Aug 2008 3:18 pm





Mumbai – World production of cotton is expected to reduce by five per cent to 2.49 crore tonnes during 2008-09 due to decline in acreage and average yield, according to the International Cotton Advisory Committee (IACA).



The ICAC said, slow economic developments across the globe and higher prices of polyester compared to that of cotton will cut cotton consumption by one per cent to 2.64 crore tonnes during 2008-09.



The increased imports by China is likely to take global cotton imports up by six per cent to 88 lakh tonnes. Also, cotton imports from the United States, Brazil and India are expected to increase.


According to the ICAC, the final stocks of cotton during 2008-09 will be 12 per cent down at 1.07 crore tonnes.

 

[rakeshmalik]

ICE cotton continues to bounce
8 Aug 2008 10:13 am

New York - ICE Futures US cotton settled sharply higher Thursday as options trading and Chicago grains gains boosted the market's technical bounce.

Most-active December futures settled 182 points higher at 71.38 cents a pound and the nearby October contract settled up 187 points at 69.33.

December cotton futures rose from the open but gradually gave back gains until bullish options trading and support from strength in Chicago Board of Trade Grains kicked in to push market futures higher. Buying on the dips sent the market to incremental successive highs until light selling came in above the 71-cent level. Buying overcame the pressure and cotton settled just off session highs.

Futures have likely put in a market bottom to build higher in the near term, analysts said.

Cotton's second day of gains extended their technical bounce from a 49-week low close Tuesday, said Alan Brugler of Brugler Marketing and Management in Omaha, Neb.

The December close above the 70.78 level is considered bottoming action, said Mike Stevens, futures analyst at SFS Futures in Mandeville, La. A market bottom in place gives cotton a new support level to build higher.

"However, a close now above 72.38 (basis December) would be outright bullish to the speculative community but would also move the market away from resting demand," Stevens said.

Short covering is likely Friday as traders build in bullish expectations for Tuesday's USDA supply and demand report, Brugler said.

ICE daily cotton stocks decreased by 25,256 480-pound bales Wednesday to total 1.71 million bales with 4,577 awaiting review. There were 25,204 decertification notices issued.

ICE cotton open interested increased by 197 positions Wednesday to total 218,009, according to the exchange.

Volume was estimated 16,018 lots. In options, approximately 4,313 calls and 4,313 puts traded, according to exchange data.

Close Change Range
Oct 69.33 +187 pts 67.50-69.33
Dec 71.38 +182 pts 69.58-71.43
Mar 76.39 +162 pts 74.68-76.39

 

[rakeshmalik]

Cotton futures collapsed and fell below 70 cents on the week, but were supported by major resistance at 69 cents, basis December. The market broke initially on speculative profit taking in the outside markets. Of course, it had been speculative funds that had driven cotton prices higher over the past six months. Yet, with one exception, cotton’s fundamental position remains weaker than it was when prices were more than ten cents lower. The exception is, of course, the fact that U.S. and world cotton plantings were lower in 2008 than in 2007 and the only logical projection is that 2009 cotton plantings will be even lower. It is that single fundamental that will likely prove to be the base that will keep the New York December futures from trading significantly below 69 cents. However, should the market break below 69 cents it will be short lived. The importance of the outside markets will continue to mean extreme volatility in cotton prices. However, this week’s downside activity will soon give way to higher prices. That is, the December will likely return to the 71-75 cent trading range.

Tuesday’s supply demand report in now within the market’s eyesight as the industry waits on USDA’s appraisal of the U.S. and world crop, as well as world consumption estimates. Look for both the U.S. and world crop to be lower than in the July estimates. You can access an excellent discussion of the report next Thursday (Aug. 14) on the monthly Ag Market Network live broadcast at 7:30 AM Central time. Call 1-888-889-5345 to listen over the telephone. Additionally, the conference will be aired live over radio station KFLP 900 AM Floydada Texas. The program will also be aired live at www.AgMarketNetwork.net and a recording of the discussion will be at the same website the remainder of the month.

The final weekly export report for the 2007-08 marketing year confirmed that USDA will have to lower its estimate of exports from its current projection of 13.9 million bales by almost 300,000 bales, down to 13.6 million. Too, 2007-08 ending stocks will be 10.5 million bales, instead of 10.2 million. Thus, it is clear than the current fundamentals do allow for trading below 70 cents. It is only the potential strength of expectations surrounding the 2009 situation that will support the market.

Weekly export sales for the week ending 7/31/08 were 10, 900 RB of Upland. Shipments were 353,200 RB. A total of 1,980,300 RB in Upland sales were carried over from the 2007/08 marketing year and will be shipped during the current season. For the 2007-08 marketing year the primary destinations were China (4,099,400 RB), Turkey (1,799,400 RB), Mexico (1,482,700 RB), and Indonesia (1,122,100 RB). Total shipments of 808,400 RB of American Pima were up 23 percent from the 652,400 RB exported the year earlier.

The weather related concerns continue to exist for India, China and the U.S. Parts of China are too wet while other parts are too dry. Hurricane and tropical storm rains were a net plus to Texas. While the moisture took it toll on the South Texas crop, the West Texas plains dryland crop received very beneficial rain.

The weekly Cotton on Call Position Report, released by the Cotton Exchange, shows that call sales for the December contract are about twice that of call purchases. Typically, that ratio would be reversed. One very plausible interpretation is that mills are betting heavily the cotton prices will move still lower. While both U.S. and world stocks would allow for such market activity, I personally doubt such will occur. Again, the culprit would be the market’s concern regarding planting acreage for 2009. That is, the December 2009 futures contract will support the December 2008 contract.

 

[rakeshmalik]

Prices range-bound on cotton market amid lean business

KARACHI (August 09 2008): Prices were seen range-bound on cotton market on Friday amid rising expectations that the ginners' strike may end after their meeting on Saturday with the Chairman of the Federal Board of Revenue and the textile secretary, dealers said. The official spot rate was not changed, left at Rs 4250, they said.

In the ready business, the phutti prices in Punjab were at Rs 1950-2000 and in Sindh at Rs 1800-1850, they said. Firstly, the Pakistan Cotton Ginners Association (PCGA) to meet the Textile secretary to explain the issues, creating problems for them and then they will confer with the FBR chairman Ahmed Waqar. It is expected that the strike may not last for long because as it is causing immense loss to the cotton business, they said.

Market sources said that the phutti arrival continues and the ginners, who have unsold stocks are trying to sell them because of attractive rates. Many brokers were anticipating that the prices may depict further easier trend in days to come.

In the meantime, after the rains in cotton belt, the mealy bug has become a serious threat to the crops including cotton. This is giving an impression that the government must take measures to tackle farm related diseases to save the standing crops, which earns huge foreign exchange for the country, they said.

"The pest has the potential to destroy crops if not managed properly," says a release issued by media liaison unit (MLU) of agriculture directorate Multan. According to an Australian cotton broker, the world cotton prices could gain 20 percent or more during the next 12 months and also causing an attraction for the farmers as they may switch over and give up planting other crops.

On Thursday, the NY cotton futures ended up over two percent, extending a bounce from Tuesday's 11-month low below 69 cents a lb on options-related buying and outside market strength. Cotton for December delivery settled up 1.82 cents, or 2.6 percent, at 71.38 cents per lb. The session range spanned from 69.56 to 71.43 cents.

THE FOLLOWING DEALS WERE REPORTED: some 400 bales of cotton from Shahdadpur sold at Rs 4175, same figure from Shanghar at the same rate, 300 bales from Harappa at Rs 4275 and same figure from Khanewal at the same price, dealers sai

 

[rakeshmalik]

Pakistan - the country is going through a very difficult period of political and economical instability. Since
last November, there has been an unprecedented devaluation of the Rupee against the U.S. dollar of
some 15% together with high inflation and sharp increase of interest rates. The textile industry is
suffering and complaining against the heavy increase of energy and labor cost as well as power cuts and
is blaming the government of not taking any action. New crop 2008/09 is progressing satisfactorily, but
only at the end of the crucial period of August/September will we be able to get more accurate crop
figures. All will depend on the monsoon rains and the control of the insect attacks and diseases.
Sowings seem to have been around 10% less as compared with previous expectations. Most present
estimates foresee a crop of around 12 million local bales (9.4 480 lb. bales) compared with 11.4 million
(8.9) in the previous season. Consumption between 15/16 million (12/12.5) was unchanged. There have
recently been export sales of up to 50,000 bales of early new crop cotton from the Punjab to India and
some to other Far Eastern markets. The reason for this unusually early availability was the loss of the
potato crop due to a disease in some parts of Central Punjab and consequently, the early cotton
plantings. Imports of cotton during the past season were more than 4.0 million bales (3.1), more than
half of which came from India. Other important suppliers were Brasil, West Africa and the USA.

 

[rakeshmalik]

NYK Futures – The market had a volatile week trading in tandem with
grains, soybeans and crude oil. NYK was under heavy pressure Monday,
closing only slightly above limit down as spill over selling continued from
Friday’s weak close. With December making an eleven month low, demand
from the export market emerged adding support to the market. The CFTC
reclassified a large account from a hedge to a spec on Tuesday forcing them
to liquidate large positions to comply with the new limitations which created
large swings in the commodity markets, including cotton. The market ended
the week at the lower end of the weekly range obviously influenced by a
continued strengthening of the U.S. currency.
U.S. Export Report – According to the last USDA export sales report, a
total of 13,149 million actual bales, whereof 12.341 million bales of upland
cotton and 0.808 million bales of Pima cotton, were sold for export during the
2007/08 cotton calendar year that ended on July 31, 2008. The total figure
of actual bales exported is the equivalent of about 13.697 million statistical
bales of 480 lbs. The main buyers for upland cotton were mills in China with
4.099 million actual bales, followed by Turkey with 1.799, Mexico 1.483,
Indonesia 1.122 and Thailand with 0.795. The top 5 countries buying Pima
cotton are mills located in China with 0.173 million actual bales, followed by
Pakistan with 0.159, India 0.14, Indonesia 0.062 and Japan 0.050 bales. According to the same source,
a total of 1.980 million bales of upland cotton and 0.024 million bales of Pima cotton sales were
transferred to the 2008/09 crop year.
U.S. Crop 2008/09 - USDA will release its monthly supply and demand report on Tuesday, August 12,
2008. This report will provide a clearer picture of the U.S. crop because the report will provide a state by
state production forecast. Several private estimates are suggesting that the USDA 2008/09 crop figure
might range between 14.5 and 14.7. Beneficial rainfall during last week and the present week in West
Texas may have induced expert crop forecaster for a slightly bigger U.S. crop compared with last month’s
figure. The latest weekly USDA U.S. crop condition report showed a slight reduction for the week under
review. The good to excellent category was unchanged at 47%; whereas the fair rating 32%, down 1%,
and the poor to very poor category increased to 21%; up by 1%.


///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////



Cotlook A Index (FE)
2008/09 79.50 -.85
U.S. Exports Net Sales
Accumulative 5,676,400
Weekly 118,600
Singapore 44,500
India 18,700
Thailand 9,600
Wkly Shipments 355,200
CCC Loan Outstanding
4,195,399 -450,611
NYK Open Interest
219,052 +1,043
Net Speculators’ Position
Long .9% +0.2%
NYK Certificated Stocks
1,717,450 -24,962
Awaiting review 4,043