Markets slightly improve asking price for US growths
02 Sep '06
3 min read
The cotton market treaded water again this week, for near the fifth consecutive month. The summer doldrums continue as the major news item. The physical trade of cotton around the globe was very active this week, but the demand for U.S. supplies remained very light as lower priced comparable growths dominated international trade.
We do note, however, most of the old crop non U.S. low grade SLM 1-1/16 inch cotton has now been sold. New York's very tight trading range will likely continue until the world gets a look at USDA's September supply demand report due to be released Tuesday, September 12. Nevertheless, the price bias is to the upside.
The ever dwindling supply of non U.S. cotton has provided solid support to the market as the major competitive growths are noticeably shrinking. Price quotes for numerous foreign growths, offered as recently as a month ago, are no longer offered on a consistent basis.
This has supported the markets slightly increased asking price for U.S. growths. Generally, and across all growths, the offer for U.S. growths is higher than competing cottons. Yet, the 60 to 90 day immediate demand coming from international spinners has kept a firm bottom in New York futures.
Most likely the 54 cent level, basis December will hold. Should that support fail, the market would be expected to see an almost immediate rebuilding above 54 cents as nearby demand remains very strong.
Cotlook's Beijing office suggested this week that the Chinese crop could be 28.9 million bales, a very hefty figure that seems impossible to meet. Cotlook itself has the Chinese crop at 28 million bales.
marketing@alchempro.com
