Market news over the week provided the perfect platform for a rally on NYF with December settling at 62.21 c/lb, up 363 points from last weeks close.
President Trump delayed the imposition of tariffs on Chinese goods as a gesture of goodwill. In return, China was in the market buying US Ag products. For now it is unclear whether these enquiries have included cotton. Either way, trade war news has been far more positive this week, providing support to the market.
The WASDE report was bullish on US due to reduced production of 600k bales, however it was in line with trade expectations of increasing global stocks based on reduced global consumption. The market however barely reacted to this news and focused on the more positive developments on the trade war.
Interest from Bangladesh seems to have returned which is welcome. They have been able to sell some of the building yarn stocks which has in turn meant renewed enquiry for nearby shipments of cotton. India is also fairly active looking to buy nearby cotton, although stocks in port are taking priority. Talk of defaults continues in the market which has left cotton on the water needing to find homes.
With December now trading at 62 c/lb we will have to see whether the funds decide to take their profits and get out of their short positions. If they do then we could see a further rally on NYF. However, with a rally will likely come producer hedging which should act as a barrier for NYF to climb into the high 60’s.
The next few days should no doubt be interesting, though mills might decide to take a back seat regarding purchases until they see a bit of stability and an idea of where the market may rest. We personally feel that the market could be quite volatile next week as the funds position themselves and producers look to take advantage of some higher prices.
Source: Mambo