|
Frequently Asked Questions
Cotlook Indices
What is Cotlook?
Cotlook is short for Cotton Outlook, our traditional weekly news journal, which is circulated in over 100 countries. Cotlook is wholly owned by The Outlook Group Limited which in turn is owned by its working directors. Cotlook's sister companies within the Group are engaged in arbitration and consultancy services.
Cotlook is the leading commercial provider of international cotton market information and analysis and is the source of the Cotlook A Index. The company's origins stretch back over eighty years and its staff have developed an unrivalled reputation for their expertise, impartiality and integrity. Cotlook offers services in English, Spanish, Portuguese and Russian. Also, its services are available in Chinese via Beijing Cotton Outlook.
What is Beijing Cotton Outlook?
Established in 2004, Beijing Cotton Outlook is a joint venture between the China Cotton Association, the umbrella organisation of the China cotton industry, the China National Cotton Exchange (CNCE), the body responsible for spot auctions of government reserves and e-trading for forward delivery, and Cotlook Limited. Beijing Cotton Outlook, with full access to Cotlook's resources, is a vehicle for providing unrivalled information in Chinese to China's domestic cotton and textile industries. Cotlook publishes Beijing Cotton Outlook's comprehensive information about developments in China in other languages.
What are the Cotlook Indices?
The A Index began as a CIF Liverpool value in the days when the UK still retained a sizeable spinning industry. It later became a CIF N. Europe value, as the industry in the UK fell into decline. Most recently (with effect from August 1, 2004) the A Index has changed emphasis by representing offering prices based on CFR Far Eastern main ports terms. An Index based on CFR Far Eastern values has been compiled and published since March 2003 and has typically shown a small discount on the North European A, which is logical, given that, today, more cotton is being traded in Far Eastern markets.
Today, the Cotlook A Index is compiled from the cheapest five offering prices to mills of a basket of growths (currently 19), on the assumption that these are likely to be the cottons most frequently traded on the day in question. The mechanism of averaging the cheapest quotations has been proved to be a reliable method of calculating the Index over its forty-year existence.
The North European A Index value, and its companion B Index (for 'coarser count' cottons), now referred to as the A (NE) and the B (NE) will continue to be calculated until July 31, 2008.
When were the Cotlook Indices first introduced?
Cotlook Limited and its predecessors have been monitoring world cotton prices for some eighty years. In 1966, the Cotlook A Index was introduced. It has gone through many changes over the years, to reflect changing patterns of trade and cotton qualities. It began as a SM 1-1/16" value but is today a Middling 1-3/32" price.
Why a Middling descriptions?
The bulk of the world's major cotton crops produce cotton that falls into this quality category and it is therefore the most representative quality of the cottons traded internationally. Certain markets are admittedly dependent on higher quality description to meet their spinning requirements. These cottons include Australian, Californian, some Central Asian and some West African. But the price differentials between such cottons tend to be wide, since other factors come into play, such as even-running quality, nep content, strength and bale packaging, amongst many others. Californian Acala SJV and some Australian cottons command a significant premium over other competing origins. These premiums are typically well established and familiar to most buyers and sellers of cotton. They are fully reported by Cotlook in our Cottonquotes service.
This service also reports prices for lower grade cottons, as well as extra-long staple cotton values.
Use of a Middling quality gives the broadest possible scope to the growths eligible for the A Index and therefore assures its reliability as the prime indicator of world cotton prices.
Why an Index?
The international cotton market is dependent on the New York futures market, which is, without a doubt, the principal tool for hedging price risk and price discovery. However, only US cotton is tenderable against the New York contract and, at times, history has demonstrated that divergences can arise between New York, which is subject to speculative influences, and actual cotton values. This is where the Cotlook A Index has played a vital role in portraying price trends over the years. The A Index and New York tend, over the long term, to move in a similar direction but there have been significant deviations, with New York sometimes trading above or below the Index. The Cotlook A Index is a price barometer and is proved to have become a useful indicator of where values are on the day. For part of any year (starting in about March through to July 31), two values are produced, one to reflect nearby shipment offers, the other to indicate Northern Hemisphere new crop values.
How are the Cotlook Indices used?
The Cotlook A Index has long been regarded as the recognized barometer of world prices. It is used by the United Nations Committee on Trade and Development (UNCTAD) as a component of its agricultural price measure.
It has been used since the nineteen seventies as the preferred price measure by the International Cotton Advisory Committee (ICAC), the "United Nations of cotton", as the device by which that body follows price developments. The ICAC has developed a price-forecasting model which attempts to predict the season's average level of the Cotlook A Index as a guide to its member countries.
Since 1985, the Cotlook A Index has been the principal ingredient of the US Commodity Credit Corporation's Upland 'marketing loan' (whereby US farmers borrow money from the government with their cotton as collateral, and repay the loan at a lower rate, if a value based on the Cotlook A Index is below the loan value). Since 1990, the US 'competitive adjustment procedures' have used the Cotlook Indices in order to determine additional payments to US domestic mills and exporters. These values refer to North European prices, i.e. the A (NE) and B (NE) Indices. The second of these procedures, known as 'Step 2', will be withdrawn as from July 31, 2006.
Following the break-up of the Soviet Union, Uzbekistan's Ministry for Foreign Economic Relations and equivalent bodies in the other Central Asian republics have all determined their export selling prices by reference either to the Cotlook A Index or an average of the A Index and its Uzbek component. The A Index has also been used to establish prices payable to farmers in some of those countries.
The Cotlook A Index is difficult to use as a hedging device but there are banks and other organisations that offer specialised trading products whereby the Cotlook A Index can be used a hedge.
The foregoing are a few examples of how the A Index is used. Reference to the A Index in establishing prices can be found in many other countries, stretching from Latin America to China. In China, several studies conducted by Beijing University on behalf of the government have employed the A Index in one way or another.
Is Cotlook engaged in cotton trading?
Emphatically not! Cotlook's role is to monitor and report the A Index impartially and accurately. The Cotlook A Index is compiled solely by the staff of Cotlook, who are barred from engaging in any trading activity in cotton. Their integrity has been proven over the four decades in which the A Index has been compiled.
Cotlook Services
How do I subscribe to any of Cotlook's services?
Please contact our subscriptions department at subscriptions@cotlook.com or take out a trial via the web.
How do I advertise in Cotlook's publications?
Advertising enquiries are welcome. Please contact our advertising department at advertising@cotlook.com.
Are real time feeds available for New York futures?
A real time feed is available for a premium of US$105 per month. The ticker refreshes automatically every minute, but can also be manually updated more frequently. A link to Reuters' FOREX feed is also available with a delay of 10 minutes.
What is the Cotlook Special Edition?
The Special Edition is published to coincide with the Annual Plenary Meeting of the International Cotton Advisory Committe and focuses on issues affecting the raw cotton and textile trade in the country or region where the meeting is held. The inaugural issue was in 1992 when the ICAC met in Liverpool. The Special Edition is circulated free of charge to Cotlook Subscribers and to those who attend the ICAC meeting.
What are the Cotlook Special Features?
Periodically, throughout the year, Cotlook publishes Special Features, which focus on an individual market or topic of interest. An example is the Long Staple Special Feature, which we have published annually around the middle of the year. Cotlook Special Features, published since 1997, are available free of charge to Cotlook subscribers but can also be purchased individually. For details please see our website or contact our subscriptions department at subscriptions@cotlook.com.
Are Cotlook's services available on public holidays?
It depends on whether it is a public holiday in the UK or the US. The Cotlook Daily and Cotlook Cottonquotes are not available on the following dates in 2007 & 2008, though important stories may still be found on the website:
| Liverpool | Memphis |
| 2007
| | Dec 25 | Sep 4 |
| Dec 26 | Nov 11 |
| | Nov 23 |
| | Dec 25 |
| 2008
| | Jan 1 | Jan 1 |
| Mar 21 | Jan 21 |
| Mar 24 | Feb 18 |
| May 5 | Mar 21 |
| May 26 | May 26 |
| Aug 25 | Jly 4 |
| Dec 25 | Sep 1 |
| Dec 26 | Nov 11 |
| | Nov 27 |
| | Dec 25 |
|
Miscellaneous
Does Cotlook monitor cotton yarn prices as well?
Apart from weekly reports in our Cotton Outlook, some of which contain yarn price information, we aso publish the Cotlook Yarn Index. The Index is designed to monitor movement in yarn prices and is derived by calculating an average from a set of FOB prices for ring spun carded 20's and 30's from six origins (weighted to reflect exports of all yarns from each individual country) and is expressed as a percentage of the comparable value for July 2000.
Does trading still take place at Liverpool Cotton Exchange?
No. However, the Exchange Building is still home to the International Cotton Association.
Is there a connection between Cotlook and the ICA?
Cotton Outlook is not linked with the International Cotton Association in any way, apart from some of its staff are members of the Association.
|
 COTLOOK INDICES |
| 'A Index' |
74.25 (+0.50) |
13:38 GMT 9th May, 2008
 |
|
|
Withdrawal of the 'NE' Indices