– Yesterday, at EAP were very much inspired by Liverpool’s very own Katarina Johnson-Thompson determination to finish her race at the Tokyo Olympics in the face of outstanding obstacles (https://www.eurosport.co.uk/athletics/tokyo-2020/2021/tokyo-2020-olympics-brave-katarina-johnson-thom-hobbles-to-finish-after-devastating-injury-during-20_vid1521317/video.shtml). Today, we were reminded of this by our own struggles to produce a market report in the face of such a lack of cotton market events!!!!
– We may be, “perhaps”, guilty of over dramatizing our own challenges, but it is true that the market is searching for a development to give it a more purposeful direction. The lead contract Dec ’21 closed today up 37 points at 90.68 and, once again, we look to see if 90 can hold. For two weeks we have had a closing range of 89.39 to 90.68 (today’s close) and the market very much needs an event to break the torpor.
– In China mills are now armed with import quotas and are focusing their attention on the consignment stocks in the port free trade zones. There were about 600-700,000 MT in warehouse prior to the release of quotas. Whilst it is too early yet to estimate the total volume of sales so far, the pace has been reported as brisk. At the same time, the excellent offtake of the, higher priced, reserve stocks continues and the total sales to date now stands at 228,946 MT.
– The global cash market has turned extremely quiet, especially for nearby shipments. There are a number of reasons for this, first of all there is, quite simply, very little cotton for available for nearby shipment and what there is quickly finds willing buyers. Secondly, recently some consuming nations, notably Bangladesh, Indonesia and Vietnam, have implemented complete or partial lockdowns, which has curtailed mill operations and caused a short-term hiatus in demand for cotton, even though the mills are making good money and would much prefer to keep spinning. Finally, as the market has, so far, failed to hold above the 90 cents level for a protracted period of time, and with the US crop seemingly increasing in size, some mills are playing a waiting game in the hope of better opportunities to cover their needs. Nevertheless, mills globally report positive yarn margins and strong end user demand. As quiet as it is, it does not appear that the good times are over for the spinning community!
– As we look to end user demand the below chart of Nike stock offers a positive picture. After posting excellent sales numbers at the end of June the stock has not looked back. Of course, being a sportswear brand, many Nike products rely on synthetic fibres rather than cotton, however, Nike’s recent performance is an extremely encouraging indication of the consumers’ demand for apparel.