Weekly market report

Transcription

Weekly market report
December 18, 2014
COTTON MARKET REPORT
Dec17
Dec10
change
ICE Mar15
60.65
59.57
1.08
ICE May15
61.16
60.18
0.98
ICE Jul15
61.87
60.92
0.95
ICE Dec15
64.43
63.65
0.78
ICE Mar-May15
-0.51
-0.61
0.10
ICE May15-Jul15
-0.71
-0.74
0.03
ICE futures open interest
173'902
173'720
182
ICE certified stocks
56'044
45'709
10'335
68.35
67.85
0.50
ICE Cotton Futures Mar15, Daily
64
63
62
61
60
12'915
-55
89.133
88.271
0.86
58
Dec 14
12'860
USD Index
Nov 14
ZCE May15
Oct 14
59
A-Index 14/15 (previo us day)
ICE Cotton Futures – This has been a turbulent week for many markets. Crude oil prices set new lows before being
able to erase some of their recent losses. Equity markets acted quite nervously and the Russian Ruble saw a
mindboggling range expansion and depreciation. Less spectacular, but still noteworthy, was the weakness of the
Indian Rupee which moved to its lowest level vs. the US$ in over one year.
In contrast, the cotton market has remained pretty much unimpressed by all of the surrounding noise. Cotton futures
did try to break above range resistance. The effort turned out to be a failure which triggered selling pressure from
disappointed short-term longs, but yesterday prices managed to recover with a late session rally. Overall, no real
change has occurred as prices have remained within a 300 point sideways range which is in place since midNovember. Eventually, a break will occur, either way. However, it still proves difficult to find good enough reasons
why prices should move in a substantial and long-lasting fashion away from current boundaries. Nevertheless, the
possibility of a range expansion to about 64.50, respectively 56.50, should not be completely ruled out, even in the
short-term.
Bloomberg Commodity Index
ZCE Cotton Futures May15, Daily
14200
140
14000
135
13800
130
13600
125
13400
120
13200
13000
115
12800
110
12600
105
Dec 14
Oct 14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Dec-14
1
Nov 14
12400
100
12200
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December 18, 2014
COTTON MARKET REPORT
USA – This week we take a more in-depth look at the December U.S. crop report. Looking specifically at the High
Plains of West Texas which is one of the single largest cotton producing areas in the world, the National Agricultural
Statistics Service returned to a downward trend on their prediction for the 2014 High Plains cotton crop. This is after
inching High Plains production estimates upward in their November report. USDA estimates that High Plains growers
will produce 3.416 million bales of cotton in 2014, down 329’000 from their November number of 3.745 million.
Most of the reduction can be attributed to decreased outturns in the non-irrigated producing areas. Classing has
surpassed the halfway mark. For the season cotton classing in the area is approaching 2.0 million bales.
Approximately 75% of bales classed this season have been color grade 21 or 11, and average length for the season is
35.63, which is about on par with recent historical trends. Average micronaire for the season is about 4.0 which is
surprisingly better than recent years. Producer selling continues at a good pace in spite of the generally weak futures
market. By most accounts, growers to merchant business on a daily basis surpasses 30’000 bales.
India – Total all India arrivals for current crop reported around 9.11 million bales (170 Kgs) till 16 th of December of
which Cotton Corporation of India has procured around 2.45 million bales under minimum support price program.
The Gujarat government announced INR 11 billion relief package which will be allocated to farmers, to assist them
with costs such as outstanding loans and electricity bills. Scattered unseasonal rains were reported in Maharashtra
and Northern India, due to which arrival were slow in above regions. Lint prices for new crop Shankar-6 good quality
reported around INR 33’250 per candy ex-gin equivalent to US Cents 68.20 per lb FOB based on prevailing exchange
rate. USD/INR currency pair hit a 13-month high at 63.59, heavy dollar demand amid panic sell-off in equities and
debt, as FIIs reduced their exposure to Indian equities markets. India’s trade deficit widens to 18-month high of USD
16.86 billion, in November as Gold imports surges by six times to USD 5.60 billion. Overall exports grow by a mere
7.30% as compared to a 26.80% jump in total imports.
China – At the beginning of the reporting week the May15 contract made a new attempt to reach the nearest key
resistance at 13’400 following the rally on ICE, but once again it was unable to hold the gains and fell back to below
13’000 to close virtually unchanged. Breaking and closing below 12’640 sets the life of contract low at 12’320 as
minimum downside target.
Domestic market prices continue weak. Xinjiang hand-picked high grades are offered from small producers around
13’800 RMB/ton delivered Eastern China, the theoretical equivalent of about 88.00 c/lb for import under TRQ quota,
paying 1% tax. Machine picked Xinjiang is available at 13’000 RMB/ton, and local cotton as low as 12’800 for grade 3.
The largest mill in Shandong is still officially quoting a buying level of 13’000 RMB/ton for grade 328, about M 1.1/8;
but since they already bought significant volume they are now only accepting limited quantities and started to select
quality very strictly. Since in Eastern China at least one third of production is still in farmers’ hands, selling pressure is
likely to continue for some more time. On the other hand, the Xinjiang production army has only sold very small
volume and is still holding most of their production for now, deliberately offering at prices above the current market.
Import business continues very slow with demand concentrated for afloat cotton or lots which can be guaranteed to
arrive by end of February.
Spinning industry should be running better in theory with falling cotton prices; in practice so far there has been little
change from the generally negative outlook and demand is still very much restricted to hand-to-mouth buying.
The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Private
customers should not invest in these products unless they are satisfied that the products are suitable for them and have sought professional advice. All information in this report is obtained from
sources believed to be reliable and we make no representation as to its completeness or accuracy. The information may have been acted upon by us for our own purposes and has not been
procured for the exclusive benefit of customers.
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