MULTAN (February 06, 2008): Over 10 million bales have reached ginneries across Pakistan till February 1, 2008, according to a fortnightly report issued by Pakistan Cotton Ginners Association (PCGA). Total 10,644,058 bales have arrived at ginneries across the country registering a short fall in comparison to last year's arrival during the corresponding period that was recorded at 11,928,506
Cotton
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Cotton prices to stay firm next year too
Speculative inventory build-up keeps Indian rates firm
G. Chandrashekhar
Mumbai, Feb. 5 Even though 2007-08 season is still under way with crop being marketed, the global cotton market participants have begun to focus on the prospects for the next crop (2008-09). The forecast for next year is that production would trail consumption by about half a million tonnes (mt), as result of which global stocks would be drawn down further. This will obviously have implications for cotton prices. Already, for the current season, the average price is projected at 67 cents a pound, 8 cents higher than 59 cents a pound of the previous year. According to Washington-based International Cotton Advisory Committee (ICAC), the world cotton area next year is projected to remain more or less unchanged at 33.9 million hectares; but there would be regional changes.
area coverage
While the US may face a decline in area coverage of about 11 per cent, there could be slight increase in major producers China and India. World cotton yields are expected to continue rising in 2008-09 and are projected at 794 kg a hectare, the ICAC said adding that as a result, world cotton production would rise by 1.0 million tonnes, to 26.9 mt. World consumption, on the other hand, is set to rise further to 27.4 mt.
As result of this slight mismatch, the world market is likely to use up some inventory. Ending-stocks are projected 5 per cent lower at 10.9 mt.
Robust Season for India
As far as India is concerned, 2007-08 season has turned out to be a great one so far. Record cotton output (over 300 lakh bales) combined with attractive export opportunities (estimated at 60 lakh bales) have kept domestic prices firm. Growers have largely benefited from higher yields combined with firm prices.
However, textile mills have been rather unhappy with the internal price level.
Their expectation of a decline in prices based on large production has not materialised. The industry needs to sharpen its forecasting abilities, taking into account global and domestic market dynamics. It is believed that recommendation to ban or restrict cotton export has been made to the Government.
There is also reason to believe, the benefit of strong prices may be flowing to those who took a speculative view of prices early in the season and built inventory.
Trade reports suggest, some multinationals that have access to low-cost funds have created a huge stockpile of cotton and are currently enjoying windfall profits. This seems to a situation similar to oilseeds.
Despite record soyabean crop, market prices have remained very firm because of speculative inventory built up by some players.
Underground stocks
Whether the Government would take any action to bring the underground stocks of cotton into the market to support the cotton textile industry, which is already reeling under the adverse impact of a firming rupee, remains to be seen.
The peak season for cotton picking is over. Market arrivals from now on would slow down.
The potential for a major correction in prices appears to be rather limited. From March/April, planting and related developments in origins such as the US would be watched carefully.
Speculative inventory build-up keeps Indian rates firm
G. Chandrashekhar
Mumbai, Feb. 5 Even though 2007-08 season is still under way with crop being marketed, the global cotton market participants have begun to focus on the prospects for the next crop (2008-09). The forecast for next year is that production would trail consumption by about half a million tonnes (mt), as result of which global stocks would be drawn down further. This will obviously have implications for cotton prices. Already, for the current season, the average price is projected at 67 cents a pound, 8 cents higher than 59 cents a pound of the previous year. According to Washington-based International Cotton Advisory Committee (ICAC), the world cotton area next year is projected to remain more or less unchanged at 33.9 million hectares; but there would be regional changes.
area coverage
While the US may face a decline in area coverage of about 11 per cent, there could be slight increase in major producers China and India. World cotton yields are expected to continue rising in 2008-09 and are projected at 794 kg a hectare, the ICAC said adding that as a result, world cotton production would rise by 1.0 million tonnes, to 26.9 mt. World consumption, on the other hand, is set to rise further to 27.4 mt.
As result of this slight mismatch, the world market is likely to use up some inventory. Ending-stocks are projected 5 per cent lower at 10.9 mt.
Robust Season for India
As far as India is concerned, 2007-08 season has turned out to be a great one so far. Record cotton output (over 300 lakh bales) combined with attractive export opportunities (estimated at 60 lakh bales) have kept domestic prices firm. Growers have largely benefited from higher yields combined with firm prices.
However, textile mills have been rather unhappy with the internal price level.
Their expectation of a decline in prices based on large production has not materialised. The industry needs to sharpen its forecasting abilities, taking into account global and domestic market dynamics. It is believed that recommendation to ban or restrict cotton export has been made to the Government.
There is also reason to believe, the benefit of strong prices may be flowing to those who took a speculative view of prices early in the season and built inventory.
Trade reports suggest, some multinationals that have access to low-cost funds have created a huge stockpile of cotton and are currently enjoying windfall profits. This seems to a situation similar to oilseeds.
Despite record soyabean crop, market prices have remained very firm because of speculative inventory built up by some players.
Underground stocks
Whether the Government would take any action to bring the underground stocks of cotton into the market to support the cotton textile industry, which is already reeling under the adverse impact of a firming rupee, remains to be seen.
The peak season for cotton picking is over. Market arrivals from now on would slow down.
The potential for a major correction in prices appears to be rather limited. From March/April, planting and related developments in origins such as the US would be watched carefully.
Made in India brand has better credibility
Indo Asian News Service
Tuesday, February 05, 2008 (Dubai)
Indian textile products have a better brand credibility than Chinese products that are flooding the markets across the world, according to Indian Textiles Minister Shankarsinh Vaghela.
"It is no point comparing Chinese textile products with India's. The 'Made in India' brand has extremely good credibility across the world," Vaghela said.
The minister is leading a high-level delegation on a four-nation tour to promote Indian textile exports and attract foreign direct investment in the textiles industry. After visiting Istanbul, Athens and Cairo, the delegation reached this west Asian commercial hub on Saturday.
"Yes, we cannot compete with Chinese textile products in terms of prices but so is the case with all other goods. But in all the markets that we visited this time, we found that the brand credibility of Indian products is much better than China's," he stated.
He, however, added that the appreciation of the rupee has hurt India's textile sector.
"The rupee appreciation has hurt the textile industry in terms of exports and our exports fell last year."
The minister has invited investors in the United Arab Emirates to invest in India's textile sector.
"We have invited potential investors in the UAE to invest in India's textile sector with 100 per cent equity through the automatic route," Vaghela pointed out, adding that his delegation's mission is not only to promote exports of India's textile products but also to attract foreign direct investment in India's textile sector.
Of India's total exports of $12 billion to the UAE, exports of textile products stand at $1 billion. India's total textile exports across the world amounts to $19 billion.
"We got very positive response from potential investors here. I was pleasantly surprised to see so many people expressing interest in investing in India and having friendly ties with India," he told.
Qaiser Shamim, joint secretary in the Ministry of Textiles, who is accompanying the minister, said that textile merchants in this Gulf nation have promised more imports from India.
"The Textile Merchants Group here, whom we met, have promised to increase imports from India by at least 20 to 30 per cent," he said
Vaghela met UAE's Minister for Planning and Economy Sheikha Lubna bint Khalid Al Qasimi in Abu Dhabi on Monday morning.
The delegation was also given a presentation by the Jebel Ali free port zone near here about the facilities it offered.
"The talks with the authorities of the Jebel Ali free zone authorities have been extremely fruitful," Shamim added
Indo Asian News Service
Tuesday, February 05, 2008 (Dubai)
Indian textile products have a better brand credibility than Chinese products that are flooding the markets across the world, according to Indian Textiles Minister Shankarsinh Vaghela.
"It is no point comparing Chinese textile products with India's. The 'Made in India' brand has extremely good credibility across the world," Vaghela said.
The minister is leading a high-level delegation on a four-nation tour to promote Indian textile exports and attract foreign direct investment in the textiles industry. After visiting Istanbul, Athens and Cairo, the delegation reached this west Asian commercial hub on Saturday.
"Yes, we cannot compete with Chinese textile products in terms of prices but so is the case with all other goods. But in all the markets that we visited this time, we found that the brand credibility of Indian products is much better than China's," he stated.
He, however, added that the appreciation of the rupee has hurt India's textile sector.
"The rupee appreciation has hurt the textile industry in terms of exports and our exports fell last year."
The minister has invited investors in the United Arab Emirates to invest in India's textile sector.
"We have invited potential investors in the UAE to invest in India's textile sector with 100 per cent equity through the automatic route," Vaghela pointed out, adding that his delegation's mission is not only to promote exports of India's textile products but also to attract foreign direct investment in India's textile sector.
Of India's total exports of $12 billion to the UAE, exports of textile products stand at $1 billion. India's total textile exports across the world amounts to $19 billion.
"We got very positive response from potential investors here. I was pleasantly surprised to see so many people expressing interest in investing in India and having friendly ties with India," he told.
Qaiser Shamim, joint secretary in the Ministry of Textiles, who is accompanying the minister, said that textile merchants in this Gulf nation have promised more imports from India.
"The Textile Merchants Group here, whom we met, have promised to increase imports from India by at least 20 to 30 per cent," he said
Vaghela met UAE's Minister for Planning and Economy Sheikha Lubna bint Khalid Al Qasimi in Abu Dhabi on Monday morning.
The delegation was also given a presentation by the Jebel Ali free port zone near here about the facilities it offered.
"The talks with the authorities of the Jebel Ali free zone authorities have been extremely fruitful," Shamim added
USA : Market range to be between 67/69
February 5, 2008
We are flirting with the top of the latest sideways trading range as we closed near the highs of the day. The biggest reason was related to heavy fund buying in the soybean market which carried over into corn and wheat as well. There were negative weather reports from Brazil about excessive moisture which can impact the large Southern Hemisphere crop in Brazil.
The grains just continue to feed on each other and cotton is forced to come along for the ride. Volume was average with 27,000 futures and 14,000 options as we are looking to break out of the current range. The spec hedge report shows only a small decrease in the long position to 24.8% as open interest is getting back near the record high at 280k as shown on page 2 in attached PDF.
March options are expiring this week, and we have several key reports coming out on Friday which will certainly have a strong impact on price direction. After several sessions of trading between 67.50 and 68.50, the latest rally in grains have tested the highs and look like they are prepared to break out even higher.
This will force cotton to follow as we continue to fight for new crop acreage. The NCC will make their first estimate for 08/09 cotton acres at their annual meeting in Memphis on Friday.
The relative strength index remains near unchanged and prices are holding the low at the 50-day moving average. We may continue to play the range between 67/69 until more information comes out on Friday.
The 50 and 9 day moving averages are starting to get closer as we move sideways and this could be a factor as we wait for a break in this current flag pattern. Grains will continue to have the biggest impact as we get closer to new crop planting and the fight for acreage
February 5, 2008
We are flirting with the top of the latest sideways trading range as we closed near the highs of the day. The biggest reason was related to heavy fund buying in the soybean market which carried over into corn and wheat as well. There were negative weather reports from Brazil about excessive moisture which can impact the large Southern Hemisphere crop in Brazil.
The grains just continue to feed on each other and cotton is forced to come along for the ride. Volume was average with 27,000 futures and 14,000 options as we are looking to break out of the current range. The spec hedge report shows only a small decrease in the long position to 24.8% as open interest is getting back near the record high at 280k as shown on page 2 in attached PDF.
March options are expiring this week, and we have several key reports coming out on Friday which will certainly have a strong impact on price direction. After several sessions of trading between 67.50 and 68.50, the latest rally in grains have tested the highs and look like they are prepared to break out even higher.
This will force cotton to follow as we continue to fight for new crop acreage. The NCC will make their first estimate for 08/09 cotton acres at their annual meeting in Memphis on Friday.
The relative strength index remains near unchanged and prices are holding the low at the 50-day moving average. We may continue to play the range between 67/69 until more information comes out on Friday.
The 50 and 9 day moving averages are starting to get closer as we move sideways and this could be a factor as we wait for a break in this current flag pattern. Grains will continue to have the biggest impact as we get closer to new crop planting and the fight for acreage
02/05 14:30 CST NY cotton settles down and trade eyes USDA report
2-5-2008 15:30 NY cotton settles down and trade eyes USDA report
NEW YORK, Feb 5 (Reuters) - Cotton futures finished softer
Tuesday on speculative sales in range-bound business although
analysts said they are already looking toward a government crop
report and at how China, the world's top consumer of cotton,
handles its severe winter storms.
2-5-2008 15:30 NY cotton settles down and trade eyes USDA report
NEW YORK, Feb 5 (Reuters) - Cotton futures finished softer
Tuesday on speculative sales in range-bound business although
analysts said they are already looking toward a government crop
report and at how China, the world's top consumer of cotton,
handles its severe winter storms.
02/05 03:40p CST DJ ICE Cotton Review: Slides From Outside Pressure In Spec Trade
NEW YORK (Dow Jones)--ICE Futures U.S. pit-traded cotton settled lower
Tuesday as weakness in U.S. equities and commodities markets pressured prices
in mostly speculative trade, analysts said.
March futures settled 77 points lower at 68.10 cents a pound and May cotton
settled down 86 points at 69.93 cents.
NEW YORK (Dow Jones)--ICE Futures U.S. pit-traded cotton settled lower
Tuesday as weakness in U.S. equities and commodities markets pressured prices
in mostly speculative trade, analysts said.
March futures settled 77 points lower at 68.10 cents a pound and May cotton
settled down 86 points at 69.93 cents.
Bearish manufacturing data released before the pit open pressured the stock
market, which led to a sell-off in electronically traded cotton, said Sharon
Johnson, analyst at First Capitol Group in Atlanta. The weakness, along with
softer gold, crude oil, corn and soybean prices, carried into pit trading and
led futures to move down in a tight range throughout the session, analysts
said.
Commodities are feeling pressure from analyst calls that recently higher
crude oil has made a top, the down-trending dollar has reached a bottom and
stock market losses are likely to continue, said Alan Feild, president of
Iamhedged.com, a Memphis brokerage firm. Cotton prices, already weighed on by
excess supply, are being held lower by these factors, he said.
Ahead of the fundamental information to be released at the end of the week,
the trade is out of the picture and speculators are moving the market, said Ron
Lawson, partner at LOGIC Advisors in Napa Valley, Calif.
The weekly U.S. export report will be released at 8:30 a.m. ET (13:30 GMT)
Thursday, and monthly U.S. Department of Agriculture crop production and world
supply and demand data will be released Friday at 8:30 a.m. ET (13:30 GMT).
Also, the National Cotton Council will release the results of its 2008 planting
intentions survey, which is considered by analysts to be indicative of
prospective cotton acreage for the coming crop year.
"With that ball of data, most of the trade have gotten themselves to the
sidelines, and there is a veritable vacuum of value-based buying," said Lawson,
putting speculators in control, he said.
Cotton is likely to trade between its recently occupied range of 67 to 69
cents basis March, under the influence of outside markets until its own
fundamentals take hold, said Lawson. The market is likely to see trade buying
if prices push lower near 67.35 basis March, Lawson added.
Daily cotton stocks increased by 3,256 bales Monday to total 506,785 bales
with 57,466 awaiting review and 7,398 decertification orders.
ICE cotton open interest increased by 1,443 positions Monday as traders sold
2,283 March and bought 3,068 May.
Volume was estimated at 18,882 contracts on the screen and 4,033 on the
floor, according to exchange data. In options, approximately 4,246 calls and
4,797 puts traded.
Close Change Range
March 68.10 -77 67.85-68.25
May 69.93 -86 69.70-70.00
July 71.78 -72 71.65-71.85
market, which led to a sell-off in electronically traded cotton, said Sharon
Johnson, analyst at First Capitol Group in Atlanta. The weakness, along with
softer gold, crude oil, corn and soybean prices, carried into pit trading and
led futures to move down in a tight range throughout the session, analysts
said.
Commodities are feeling pressure from analyst calls that recently higher
crude oil has made a top, the down-trending dollar has reached a bottom and
stock market losses are likely to continue, said Alan Feild, president of
Iamhedged.com, a Memphis brokerage firm. Cotton prices, already weighed on by
excess supply, are being held lower by these factors, he said.
Ahead of the fundamental information to be released at the end of the week,
the trade is out of the picture and speculators are moving the market, said Ron
Lawson, partner at LOGIC Advisors in Napa Valley, Calif.
The weekly U.S. export report will be released at 8:30 a.m. ET (13:30 GMT)
Thursday, and monthly U.S. Department of Agriculture crop production and world
supply and demand data will be released Friday at 8:30 a.m. ET (13:30 GMT).
Also, the National Cotton Council will release the results of its 2008 planting
intentions survey, which is considered by analysts to be indicative of
prospective cotton acreage for the coming crop year.
"With that ball of data, most of the trade have gotten themselves to the
sidelines, and there is a veritable vacuum of value-based buying," said Lawson,
putting speculators in control, he said.
Cotton is likely to trade between its recently occupied range of 67 to 69
cents basis March, under the influence of outside markets until its own
fundamentals take hold, said Lawson. The market is likely to see trade buying
if prices push lower near 67.35 basis March, Lawson added.
Daily cotton stocks increased by 3,256 bales Monday to total 506,785 bales
with 57,466 awaiting review and 7,398 decertification orders.
ICE cotton open interest increased by 1,443 positions Monday as traders sold
2,283 March and bought 3,068 May.
Volume was estimated at 18,882 contracts on the screen and 4,033 on the
floor, according to exchange data. In options, approximately 4,246 calls and
4,797 puts traded.
Close Change Range
March 68.10 -77 67.85-68.25
May 69.93 -86 69.70-70.00
July 71.78 -72 71.65-71.85
Jurgens Cotton Comments for 02.05.08
Comments from a NYBOT floor broker's perspective
cottoncomments@********** (212)-748-3899
Cotton prices resumed their course of following the grains which were stronger today, thus cotton prices improved. The active March contract settled at 68.87 up 71. Spec/Hedge numbers show specs long 24.8%, (it was 25.3% last week) and open Interest is returning to record levels.
What's next in store will be promulgated by action in the grains, but it should be noted that Friday brings not only the monthly USDA crop report along with Supply/Demand, but also the NCC will release its planting intentions report as well. In addition, Friday will be expiration day for March cotton options. So, all in all Friday could be an exciting day. It is also important to appreciate that the cotton numbers alone will not be the focus. What matters is what potential impact the grain numbers may have on cotton.
Informa, a valued and leading Agricultural consulting firm, issued a report today that suggests an increase in cotton acreage grown outside the US. I find that awkward and am skeptical. While sources have suggested that Australia is expected to increase production, other foreign producers seem likely to focus their efforts at making safe their available supply of foodstuffs. Cotton, while a significant crop, certainly doesn't play as vital a role as protecting the food supply. I have been thinking that any reductions in cotton production outside the US might allow the US export market to benefit, thus tightening ending stocks.
Near term, I look for a range in March between 67.00 and 69.50.
Support: 68.50, 68.30-20, 67.70, 6735-6720, 6677-6650
Resistance: 6910-6940, 69.90-7000, 70.85
Comments from a NYBOT floor broker's perspective
cottoncomments@********** (212)-748-3899
Cotton prices resumed their course of following the grains which were stronger today, thus cotton prices improved. The active March contract settled at 68.87 up 71. Spec/Hedge numbers show specs long 24.8%, (it was 25.3% last week) and open Interest is returning to record levels.
What's next in store will be promulgated by action in the grains, but it should be noted that Friday brings not only the monthly USDA crop report along with Supply/Demand, but also the NCC will release its planting intentions report as well. In addition, Friday will be expiration day for March cotton options. So, all in all Friday could be an exciting day. It is also important to appreciate that the cotton numbers alone will not be the focus. What matters is what potential impact the grain numbers may have on cotton.
Informa, a valued and leading Agricultural consulting firm, issued a report today that suggests an increase in cotton acreage grown outside the US. I find that awkward and am skeptical. While sources have suggested that Australia is expected to increase production, other foreign producers seem likely to focus their efforts at making safe their available supply of foodstuffs. Cotton, while a significant crop, certainly doesn't play as vital a role as protecting the food supply. I have been thinking that any reductions in cotton production outside the US might allow the US export market to benefit, thus tightening ending stocks.
Near term, I look for a range in March between 67.00 and 69.50.
Support: 68.50, 68.30-20, 67.70, 6735-6720, 6677-6650
Resistance: 6910-6940, 69.90-7000, 70.85
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