December 2001 Edition:
Prices Begin to Show Recovery -
U.S. Memphis Quote Makes A-Index
After sustaining a continued downward slide since the beginning of the 2001/02 MY, the A Index - a measure of world prices - and the U.S. Memphis price began rebounding at the beginning of November. During the initial downward trend, the U.S. price fell faster than the A Index due to vast U.S. surpluses resulting from a record U.S. crop. Prices dropped until they reached a low enough level that sellers, especially in foreign countries, preferred to store cotton rather than sell. Once the bottom was reached, speculators in the NY futures market fueled a recovery by switching from short to long positions, i.e. buying. Nevertheless the A-Index remains below the long-term average of 72 cents per pound reflecting continued surpluses of world cotton supplies. Initially during the recovery, the gap between the Memphis and A-Index widened slightly as the U.S. price responded more rapidly. However, world prices soon followed the U.S. price up and the gap continued to narrow, such that the Memphis price is now included in the A-Index. A U.S. price has not been included in the A-Index since June 22, 1999.
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TABLE OF CONTENTS
U.S. Cotton Outlook
World Cotton Outlook
U.S. Cotton Highlights
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