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Yarn values keeping lid, and floor, on cotton prices

A worsening economy has taken its toll on cotton demand Between 1998 and 2006 the world added roughly 39 million bales of global mill use
<p> A worsening economy has taken its toll on cotton demand. Between 1998 and 2006, the world added roughly 39 million bales of global mill use.</p>
Cotton is trading between 82 cents and 88 cents, a range that spinners seem to prefer. Many spinners however, don&#39;t have supplies secured for the future. Also troubling the cotton market are huge supplies in China and tight supplies elsewhere.

Cotton spinners are chasing cotton between a tight trading range of 82 cents to 88 cents, according to cotton analyst O.A. Cleveland, speaking at the Ag Market Network’s May conference call.

Cleveland noted that recent rallies in physical and futures prices for cotton “ran into very stiff resistance as the Asian price for cotton got up to about 95 cents at the Liverpool index,” said Cleveland, professor emeritus at Mississippi State University. “The same resistance halted the rally on Intercontinental Exchange futures near 88 cents in both old and new crop futures.”

Cleveland said spinners were concerned about whether they could move yarn with cotton at that price “and they stepped out of the market.”

Prices fell to around 82 cents to 84 cents before spinners got back into the market and have since to move back up. While spinners are in no mood to chase cotton prices higher, Cleveland noted their scant coverage for down the road. “They’re getting in to a little bit of a squeeze.”

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