New Cotton Crop Brings Hope in Greece
June 1, 2011 In spite of the New York futures recovery at the beginning of the week, physical demand in Greece is almost dead. Current crop stocks (slightly higher than 5,000 tons) are being offered at about $1.70/lb free on truck (FOT), but buyers are hardly following. Quantities are very limited, so ginners are not anxious to sell short.
New crop business is also very slow as basis and fixed prices keep falling. International merchants have chosen to work with fewer, hand-picked suppliers, but these suppliers have already sold part of their new production and are not comfortable with additional commitments. Furthermore, the declining basis has not been digested by ginners. Therefore, ginners are asking levels of at least 15 cents/lb for Dec. 2011 and merchants are focusing on alternative crops with better basis.
Meanwhile, the well-known Greek economic crisis is bringing several changes to our sector. Banks have become tougher with credit lines and there is a lot of debate on the survival of cooperatives who used to be supported by them. Also several private ginning firms will not get the credits that they used to get in the past; therefore it is more than likely that they will start selling slowly their cotton from the beginning of the ginning season.
Unfortunately, domestic spinning mills are also in a bad shape. A major spinner has decided to stop the operations of one unit while other big players are said to be having financial difficulties.
The only optimistic thing right now is the new crop status. According to cotton seed companies the acreage that will be professionally cultivated is about 290,000 hectares(100,000 hectares higher than last season) while the ministry of Agriculture will most likely announce a higher figure (about 310,000 hectares). Replanting percentage was not higher than previous seasons and the weather conditions are forecasted to become stable. It seems so far that the crop is a bit late due to rainfalls and lower than usual temperatures.
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