Textile Mills Seem To Be Patient Enough To Wait For Cotton Prices To Fall.

New York cotton Market: most of the 08 year May contracts were closed before the first notice day, but had little effect on the New York cotton market.

So far, there are only 917 notices, or 91700 bales of cotton.

In May 08, the number of empty contracts was reduced to 2602, indicating that the sharp market oscillation triggered by registered inventory has been postponed to the next delivery period.

The momentum of rapid increase in registered inventories has not diminished.

The 08 year July contract was at the center of the market. Before Thursday, the contract showed a horizontal pattern. On Thursday, 08 years in May, the performance of the contract was very poor. The demand for us cotton in the overseas market was greatly reduced. The domestic demand of the United States was disappointing. The US dollar strengthened and the gold price plummeted.

The weather began to play a role in the commodity market.

Even if the lead contract has been pferred from 08 to 08 in May, the demand for textile mills is still around 70 cents. Textile mills seem to be patient enough to wait for prices to fall.

The Commodity Futures Trading Commission hearing: all walks of life admit that the recent upheaval has weakened the reliability of market hedging tools.

The cotton industry representatives have clearly pointed out that the futures market has been separated from the spot market, causing some problems: 1) an investigation into the events in ICE in the early March, 2) redefining the hedging entities, indicating that those who represent the spot goods and the bundles of contracts are 3, increase the reports on the turnover of traders and the direct paction without the exchange, 4) limit the US dollar amount in the capital reserve period of the index fund, 5) increase the initial margin of the investment entities, and 6) in accordance with the requirements of institutional investors, it is not allowed to increase speculative investment limits.

In short, the Commodity Futures Trading Commission (CFTC) said that they would be very cautious when raising any quota, and they would take care of the needs of all sides.

However, they do not want to be too hasty, because hasty action may lead to huge damage to many commodity markets.

Cotton cultivation in the United States: 14% as of April 20th, the same as the five year average, but 2% later than last year.

The weather in the western region is very good. The planting in California is 82%, and Arizona has finished 40%.

Widespread precipitation and flooding in Delta area are impeding field work.

Cotton consumption in the United States: consumption figures in March 2008 were lower than expected, seasonally adjusted annual consumption was 4 million 233 thousand packs, lower than the 4 million 527 thousand figures in February.

The US agricultural law: it has been extended for fifth weeks by extending the 2002 agricultural law for a week until May 2nd.

The president of the United States sent a letter to Congress to extend the law for a year or more, but the house and Senate leaders believe that they will soon complete the work.

At present, two cotton subsidies are being amended, one is to reduce domestic subsidies from 4 cents to 2 cents, and second to store costs.

China: the planting work in 2008/09 is in full swing and should end at the end of this month.

In some areas, the temperature is low, so some cotton fields need to be replanted.

There are many hearsay about cotton output. Some well-informed people predict that the planting area has dropped dramatically. Most market participants believe that the output of new cotton is the same as that of last year, or slightly lower.

There is no doubt that farmers are complaining about the high cost of production, such as seeds, fertilizers and pesticides.

Some farmers can not help turning to other commodities, though all commodities are affected by rising costs.

Farmers are generally satisfied with last year's selling price.

On the other hand, the textile industry is entering the most difficult period in recent years.

The continued appreciation of the RMB, the expansion of labor costs, and the problem of cash flow caused by monetary constraints all constitute a fatal blow to the textile industry.

Small businesses are particularly difficult, and they may temporarily suspend production.

The "good days" of export business seem to have become history.

Fortunately, textile factories can also count on active domestic markets, while domestic cotton supplies are stable and competitively priced.

Domestic enterprises and cotton processors feel the pressure of repayment at the end of this month, and they have to lower prices.

At present, China's cotton and foreign cotton prices are roughly the same, thus suppressing import demand.

Local cotton allows textile factories to make better use of cash in hand and purchase according to the quantity required to ensure the operation of the plant.

In addition, the price of polyester is relatively stable. Polyester prices have been lower than cotton prices since the beginning of 2008, and domestic and foreign cotton prices are rising and fluctuating.

Due to the emphasis on the domestic retail market, the ratio of cotton to polyester is lower than that in the export market, so the demand for cotton imports is reduced.

Outlook: as with other commodities, cotton is also very concerned about the US dollar and the Fed's moves.