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CottonPricesWillGetCheaperAgain_

By Henry Hernandez,2014-10-23 20:06
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CottonPricesWillGetCheaperAgain_

     Cotton Prices Will Get Cheaper and Europe is full of stories aboutan overheating Chinese economy,Again! the Chinese leadership is seemingly the willing to throw more fuel on The market continued to move sideways to higher, depending on which

    fire. Last week China's President month we are looking at. While December closed within its narrow 66.42 to Hu Jintao told Asia-Pacific business 69.05 cents range for the 27th consecutive session, the widening spread has l e a d e r s t h a t C h i n a w o u l d t a k e allowed March to display a steady uptrend over the last couple of

    'vigorous' steps to boost household weeks, settling today at its highest level since October 2008.

    s p e n d i n g a n d t h e r e b y r e d u c e The liquidation of the December contract continued in an orderly and

    t s r e l i a n c e o n i n v e s t m e n t a n d i speedy fashion, as only 12444 contracts remained open before todays ''

    exports for economic growth.He session. Total open interest finally declined by about 25'000 contracts from its was quoted as saying 'our focus in recent high of 194'000 contracts, but it has still held up considerably well countering the crisis is to expand during this liquidation period as speculators maintained a keen interest in

    a n d , e s p e c i a l l y d o m e s t i c d e m cotton. March OI has already risen to 119'207 contracts, which is just

    c o n s u m e r d e m a n d . We w a n t t oslightly below the highest level we saw in the December contract (120'380 increase people's ability to spend'. lots).

    It's not as if Chinese consumers With March now assuming the spot month position at 73.00 cents, it

    w e r e n ' t a l r e a d y s p e n d i n g ! I n may take a while for the market to digest this extra 400-point jump in the

    October vehicle sales rose 76% futures price. In just seven weeks, since October 2nd, the spot month has

    from a year ago and they are up advanced by no less than 1200 points, which is difficult to swallow for most

    by 45.2% for the first 10 months. mills. However, a lot has happened during these seven weeks, as the US and Other economic indicators were Chinese crops have suffered weather related setbacks and the trend of very strong as well in October, with outside markets has acted in support of higher cotton prices (weak US

    and industrial production up 16.1% dollar, strong stocks and commodities).

    retail sales gaining 16.2% comparedWhile the quality issues of the US crop are already well known by to a year earlier. But it is not just the market, we have just received the first snapshot of the Chinese crop.

    accelerating China that is seeing According to the China Fiber Inspection Bureau, only 79% of the 2.8 million

    w t h , a s I n d i a ' s i n d u s t r i a l g r o bales classed so far were of Grade 3 or better (versus 95% last season),

    as production beat expectations with 81% measuring 28 mm or longer (also 95% last year). Only 54% had

    well in September, growing by 9.1% mike readings between 4.3 and 4.9, compared to 77% a year ago. Although the year-on-year. As long as we see statistical sample is still small, it seems to confirm that we are dealing

    the these kinds of numbers from with a below average crop in China this season, both in terms of size and

    two most populous economies, we quality.

    't have to worry too muchshouldnThe Chinese domestic market has been reflecting these concerns about cotton consumption.for quite some time and the March contracts on the CNCE and ZCE

    Even though mills have been exchange are currently trading above one dollar. The Chinese government

    successful with their hand-to-mouth has announced another auction for 500'000 metric tons to keep the local

    strategy for several years in a row, market under control, digging deeper and deeper into its stockpile. This on-

    we are getting the impression hatt going depletion of Chinese stocks creates a lot of future support, as the

    well this strategy may not work as Chinese government will probably want to refill its strategic reserve once

    t h i s t i m e a r o u n d . T h e s e a s o n a linternational prices become more attractive again.

    December 2009 China Textile 14

     shortfall is real and it is being

     China Homeware Chain Sellse x a c e r b a t e d b y t h e q u a l i t y

     issue. In addition to the friendly Aussie Brands s u p p l y / d e m a n d s i t u a t i o n i n cotton we have a speculative Australian products are to take prominence on the shelves of a new chain of c o m m u n i t y t h a t b e l i e v e s i n home decor retail stores in China.

    commodities as an asset class, China-based manufacturer Thomas Bryson International Ltd, which is listed w i t h A g p r o d u c t s g a r n e r i n g on the Australian Securities Exchange, will for the first time open a chain of particular interest. The certified Thomas Bryson homeware stores throughout China.

    stock may have contained the Chairman Roger Sexton, who is based at the groups Australian headquarters market for the last three or four in Adelaide, said each store would feature a section of Australian-made products, w e e k s , b u t w i t h D e c e m b e r including food, wine and cosmetics from established Australian brands. now practically out of the way, “The Australian way of life, and our clean and natural environment, is the the path is once again clear for envy of many people throughout the world, including the Chinese,” Dr Sexton speculators to run the show for told AAP on Monday.

    the next 10-12 weeks. “Theres a fascination about Australia in China, the way that the Americans

    S o w h e r e d o w e g o had a fascination with Australia 30 to 40 years and the Japanese did, the f r o m h e r e ? U n l e s s w e s e e Chinese do now.”

    a n u n e x p e c t e d s h i f t i n t h e The first store will be 13,000 square metres and will open in Shaoxing, in m a c r o p i c t u r e , w e b e l i e v e Zhejiang province, early next year.

    that cotton prices will be very Stores are also planned for Shanghai, Suzhou, Kunshan and Changshu, well supported throughout the opening in 2010 and 2011.

    season and mills may want to “While the focus of our Thomas Bryson Home stores is very much on the consider securing their supplies domestic market of China in the short to medium term, it is hoped that the sooner rather than later. Cotton expansion of the brand within China will allow the stores to migrate into other prices will get cheaper again, countries and areas in the Asia Pacific region over time, including Taiwan, Hong but probably not this season and Kong, the Philippines and Thailand,” he said.

    we wouldnt be surprised to see 'As well, store locations are being sought in Sydney and Melbourne. current crop invert above new Dr Sexton said while the company continued to grow globally, it had put new crop as we head into spring and vigour into building its domestic China business at a time when that countrys summer. Plantings will increase economy was heading towards a new phase of growth.

    c o n s i d e r a b l y n e x t s e a s o n i f Theres a huge expansion in houses in China as part of the Chinese prices hold, but that won't help government stimulus, they’re encouraging home building but also just the anyone who is in need of cotton affluence of the Chinese,” he said.”

    now. While March may have to Thomas Bryson International is a global textile company engaged in the do some consolidating over the supply and marketing of high-end fabrics, home textiles.

    next week or two, we believe The company currently manufactures and distributes fabrics, apparel, that speculators will eventually garments, home textiles domestically and to Europe, USA, South America and take this market higher and hatt South Africa.

    it won't be too long before May In August, Thomas Bryson reported a 7.2 per cent lift in 2008.09 net profit or July trade with an eight in $4.86 million.Shares in the company, which listed on the Australian exchange in front of them. March this year, were untraded on Monday. They last traded at 40 cents.

    December 2009 China Textile 15

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