Cotton SA Information

The Cotlook Indices are widely regarded barometers of international price movement for upland cottons used to spin medium and coarse count yarns. These constitute the broadest-based and most consistent of price data across countries that currently exists. These prices are compiled and published each day by Cotlook Ltd of Liverpool, an independent private company whose staff have no trading interest in cotton. Cotlook Ltd gathers and collates information from around the world about the prices at which cotton from various origins is offered to spinning mills and establishes its assessment of the representative price (including cost, insurance, and freight to Far Eastern ports) for each growth. The Cotlook A Index is a Middling 1-1/8-inch staple quality, and cotton from 18 countries or growing areas of the world are eligible constituents. The days index is the simple average of the cheapest five quotations from a selection (at present, numbering eighteen) of the principal upland cotton traded internationally. The rationale behind using the cheapest values in the average is that these options could be expected to be more heavily traded and could therefore be more reflective of the transactions in the global market. The A Index tends to be higher than the New York Futures for two reasons, namely: The quality of the cotton represented by the A Index is higher than the quality represented by the New York Futures; and The A Index prices include shipping costs to the Far East. New York Futures prices are for a standardised quality (a futures contract in New York is for 50 000 pounds of Strict Low Middling cotton, 1-1/16-inch staple, 3.5 4.9 micronaire). They represent the market consensus of expected future prices for that quality at the designated future times and places specified in the contracts. It is important to note that they reflect the consensus on future, not current, prices. However, there tends to be a positive but not perfect correlation between future expectations and current cash prices. Most cotton ...