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Cotlook Indices

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Cotlook 'A' Index 69.80 (-0.05) 13:37 GMT 24th Oct, 2014
Cotlook 'A' Index Plus

Glossary of Terms

A Index (Cotlook)

A full description of the Cotlook A Index can be found here.

acrylic fibre

Generic name for a synthetic fibre consisting of at least 85% of acrylonitrile units.

African Franc Zone

The name given to the francophone cotton producing states of western and central Africa. They include, in order of prominence with regard to raw cotton production, Mali, Benin, Cote d’Ivoire, Cameroon, Burkina Faso and Chad. All have a common currency, the CFA franc, which is linked to the French franc.

Argentina

Currently the second largest of the South American producing countries. The major cotton growing provinces are the Chaco and Santiago del Estero.

Australia

Amongst the top ten of the world’s cotton producers, the major cotton growing areas include the Macquarie, Namoi and Gwydir valleys in New South Wales, and Emerald and the Darling Downs in Queensland. National bale weight is given as 227 kilos.

Azerbaijan

A former Soviet state, now with a privatised ginning industry.

bale

A basic tradeable unit of lint (ginned cotton). Bale weights vary from country to country. (See under the relevant country for specific bale weights were applicable.) By convention, a ‘statistical’ bale weighs 480 lbs.

base grade

A selected grade of cotton used by cotton merchants as a basis for contracts, premiums and discounts. (See also contract, premium, discount)

basis

The difference between simultaneous prices for cotton futures and spot cotton. It may be quoted by reference to any futures month. For example the “March basis” would mean the difference between the current price of March futures and the simultaneous quoted value of any given grade and staple of spot cotton. The growth is usually quoted in terms of points on or off the applicable month trading at ICE Futures US according to the calculated difference. (See also ICE Futures US)

bear

One who anticipates a decline in prices. Opposite of “bull”.

bleached cotton linters

Linters that have been bleached ready for further processing.

boll

The fruiting structure of a cotton plant. It is made up of separate compartments called locks, in which cotton seeds and lint grow.

Brazil

The largest of the South American cotton producing countries. Growth in area planted to cotton in the centre-west region in particular has been significant in recent seasons. Annual raw cotton consumption is currently estimated at around 900,000 tonnes.

break spinning

An alternative name for open-end spinning.

broker

One who assembles individual bales or small lots into larger volumes for others. One who acts as a selling agent for shippers/growers and buyers for mills.

Bt cotton

A genetically engineered cotton carrying the Bacillus thuringiensis (Bt) gene that produces, in every cotton plant cell, protein crystals toxic to some insect pests.

call option

Gives the purchaser the right to buy the underlying futures contract at the strike price up to expiration.

carded

A yarn preparation. During the carding process raw cotton is separated, opened, cleaned and made into sliver.

CFR – Cost and Freight (named port of destination)

The seller is responsible for payment of costs and freight necessary to bring the goods to the named port of destination. The risk (loss or damage to goods), together with any additional costs incurred after loading becomes the buyer’s once the goods pass the ship’s rail at the port of shipment.

China

One of the world’s largest producers of raw cotton. In recent years a major import market.

CIF – Cost, Insurance, Freight

Term of sale signifying that the price invoiced or quoted by a seller includes insurance and all other charges up to the named port of destiniation.

classing

The process of describing cotton quality so that its value can be determined. (See also staple length, grade, colour)

clearing organisation

The body resonsible for recording all futures transactions at an exchange. also the guarantor of all options.

colour

the degree of whiteness of the cotton fibre.

colour grade

describes the colour of cotton lint. There are 30 standard colour grades, of which 15 are physical standards (held as boxed samples of the complete range of grades) and 15 are descriptive.

combed

An industrial yarn preparation. During the combing process, fibres are combed to make them parallel in the sliver and short fibres are removed.

continuous spinning

A system of spinning in which the fibre moves through the process without interruption, eg ring-spinning.

contract

agreement between two or more parties to buy or sell commodity, security, currency or index.

Cotlook A Index

A full description of the Cotlook Indices can be found here.

cotton

Cultivated cotton is a perennial shrub, genus Gossypium. There are two major species in current production – G. hirsutum, commonly known as upland cotton, and G. barbadense or pima cotton. (See also G. hirsutum, G. barbadense, upland cotton, Pima cotton)

cotton spinning system

The process originally developed for spinning cotton, applied now also to other staple fibres.

count of yarn

A number indicating the mass per unit length or the length per unit mass of yarn.

country damage

Damage to cotton caused by moisture, dust or sand affecting bales that have either been exposed to the weather or stored on wet or contaminated ground.

dead cotton

An extreme form of immature cotton, having a thin fibre wall. Can result from disease, pest attack or a foreshortened ripening period.

denier

weight of a man-made fibre or yarn, expressed as the weight in grams of 9,000 meters of the thread. The lower the number, the finer the thread.

discount

reduction in price from the base rate in order to purchase a lower grade.

dryland

cotton grown using mainly water provided by the natural cycle of rainfall rather than artificial irrigation. Also known as dryland cotton.

Egypt

Traditional producer of extra long staple cottons

English count cotton

An indirect system measuring length per unit of mass, ie. The number of hanks (840 yards) per pound weight.

fibre

A cotton fibre is classified in four ways, by its length, micronaire, strength and uniformity. (See also length, micronaire, strengthand uniformity). The fibre typically accounts for approximately 35 percent of the weight of a seed cotton, though this proportion varies.

FOB – Free on board

A shipping term which indicates that the supplier pays the shipping costs, and is usually also responsible for insurance costs. Costs relate to those incurred from the point of manufacture to a specified destination. Costs beyond this point are the responsibility of the buyer.

foreign matter

Anything that is not part of the cotton plant.

futures contracts

Based on a contract specification fixed by the exchange and traded in a single commodity. In the case of cotton there is only one significant international cotton exchange, based at New York. The basic unit of trading is 22,700 kilos or 50,000lbs (approximately 100 US statistical bales) of Grade 41 (Strict Low Middling) staple 34 (1-1/16″) micronaire 3.5-4.9. Less than 2 percent of contracts are actually delivered. They are used more as a price discovery tool or a hedging mechanism. (See also long, NYBOT)

G. arboreum, G. herbaceum

Asiatic short staple coarse cotton, usually of high Micronaire.

G. barbadense

Pima or extra long staple cotton. Major producing countries are Egypt, the USA, Israel, Peru and the Central Asian staes of the former Soviet Union.

G. hirsutum

Typically known as upland cotton of medium staple length. It is the major species of cotton grown worldwide, accounting for about 90 percent of planted acreage.

ginning outturn

the ratio of lint to seed cotton produced by the ginning process.

grade

Official US classification system given to lint to describe its quality in terms of colour and leaf content. See Universal Cotton Standards, colour, leaf.

Greece

A middle-ranking producer and exporter of cotton. Production is subsidised by the European Union.

handle

The subjective assessment of feel (roughness, smoothness, pliability, thickness).

hedging

The balancing of operations in spot cotton, or related products, with offsetting operations in cotton futures, to reduce the risk of loss through price change during the period of merchandising or manufacturing.

HVI

High Volume Instrument testing. Systems by which high speed bale by bale testing can be attained. Bales are tested for micronaire, length, uniformity, strength, elongation, colourand trash content.

ICE Futures US

The ICE Futures US (including what was formerly known as the New York Board of Trade) was founded by cotton brokers and merchants in 1870. It is the oldest futures exchange in New York. (See Also futures contracts, long).

Index, Cotlook A

A full description of the Cotlook A Index can be found here.

India

Third largest producer of raw cotton. The major producing states are Gujarat, Punjab, Haryana, Rajasthan, Maharashtra, Madhya Pradesh, Andhra Pradesh and Tamil Nadu. The bulk of output is consumed domestically.

jute

A coarse, brown fibre from the stalk of a bast plant.

Kazakhstan

Central Asian producing Republic. Cotton is sold by auction at the Stock Exchanges in Alma-Aty and Shimkent.

leaf grade

describes the leaf or “trash” content of cotton lint. There are 8 grades, of which 7 are physical (held as boxed samples covering the range of grades) and the remaining is a descriptive standard based on the other 7.

length

The average length of cotton fibre after the ginning process.

lint

The cotton fibre obtained by the ginning process once the cotton seed, leaves and casing have been removed.

long

Someone who has bought cotton futures or other cotton, is said to be long until he sells his contracts to another or accepts delivery of the cotton at the maturity date of the contract. (See Also NYBOT, futures contracts)

metric cotton count

An indirect system measuring length per unit of mass, ie. The number of kilometres per 1/2 kilogramme.

micronaire

The size of an individual cotton fibre taken in cross-section.

motes

Can be either fuzzy (immature seeds on which fibre development ceased at an early stage) or bearded (a piece of seed coat with long fibres attached). Both are often termed seed coat neps.

nep

A small knot of tangled fibre.

open-end spinning

A process by which yarn is spun from a broken-up sliver or roving.

opening

The process of separating fibres from the pressed bale.

option

Under the terms of an option contract, a buyer has the right to buy or sell a futures (or other) contract, at a specific price within a set period of time. The contract price is not dependent on the current market price for the contract item. The buyer is under no obligation to fulfil the contract.

organic cotton

Organically grown cotton uses crop rotation, beneficial insects, compost and other farming methods in place of chemical fertilisers and intensive farming techniques.

Pakistan

Fourth largest producer of raw cotton. The major producing states are the Punjab and Sind.

pima cotton

Long staple cotton variety.

polyester fibre

Generic name for a synthetic fibre made from polyethylene terephthalate.

premium

An amount by which a price is increased in order to buy a product of a higher grade or quality.

pressley

measurement of fibre strength.

put option

Gives the purchaser the right to sell the underlying futures contract at the strike price up to expiration.

quality

see also discount and premium.

raingrown cotton

cotton grown using mainly water provided by the natural cycle of rainfall rather than artificial irrigation. Also known as dryland cotton.

ratoon cotton

crop that is cut back or cropped and is left to grow again for another season.

rayon fibre

A man-made fibre made from regenerated cellulose.

reginned cotton

Reginned cotton is cotton that has passed through the ginning process more than once, and has also already been baled. It may go through the ginning again for additional cleaning, blending or the removal of foreign material.

ring-spinning

A system of continuous spinning of staple fibre.

Sea Island cotton

Fine, long staple cotton grown in the West Indies.

seed cotton

Unginned, picked cotton.

short

Someone who has sold cotton futures or other contracts is said to be short until he buys the contracts back or delivers the cotton at the maturity date of the contract.

single

Describes the ply of yarn. A single is the most popular ply and means , raw cotton twisted into a single thread.

Spain

A modest producer of cotton, mainly irrigated. Qualifies for EU subsidies.

spot quotations

Reported prices for all specific quality designations on a certain trading day.

spun yarn

Yarn spun from staple fibre held together by twist.

staple

Cotton fibre considered with regard to its length and fineness. short staple : less than 25 mm medium staple : 25 to 30 mm long staple : 30 to 37 mm extra long staple : 37mm and above

strength

prices : firmness or steadiness fibre : power of the fibre to sustain the application of force (as applied in spinning) without breaking.

strike price

The price specified in the option contract at which the futures or commodity will move from seller to buyer.

Sundan

A producer of G. barbadense (Barakat) and upland (Acala) cottons, mostly on major irrigation schemes.

synthetic fibres

Fibres or filaments produced from polymers. Not naturally occurring.

Tajikistan

The third largest Central Asian producing Republic of the former Soviet Union after Uzbekistan and Turkmenistan.

tare

The weight of wrapping bands or wires used to cover cotton bales.

technical analysis

The attempt to forecast future market action on the basis of past price behaviour. The underlying assumptions are that price fluctuations are not strictly independant and that certain chart formations tend to correlate with subsequent price direction.

tex

(grams per kilometre) A direct decimal count system for describing the linear density (mass per unit length) of fibres, filaments and yarns. The lower the number, the finer the thread.

trash

the leaf content of ginned lint.

Turkey

Major producer, consumer and importer of raw cotton. Production is forecast to expand over the coming years, as more land in the south east of the country is irrigated.

Turkmenistan

The second largest Central Asian producing Republic of the former Soviet Union after Uzbekistan.

uniformity

The degree to which the fibres in a sample are uniform based on the ration of mean length to the upper half mean length. Given as a percentage.

United States of America

One of the world’s largest producers of raw cotton, and customarily the largest exporter.

universal cotton standards

Refers to American Upland Cotton. Established in 1924 as an aid to promoting domestic and foreign trade. Recognised by 18 countries in Europe, South America and Asia.

upland cotton

Originally used to refer to cotton grown on raised lands not prone to flooding. Now refers to short and medium staple cottons.

Uzbekistan

The largest of the Central Asian producing republics of the former Soviet Union, and recently the world’s second largest exporter.

viscose fibre

A man-made fibre spun from regenerated cellulosic material.

warp

Threads which run parallel to the loom.

weave

The manufacturing of cloth by the interlacing of yarns.

weft

Threads which run at right angles to the warp.

worsted

Worsted yarns are made from long fibers of 3 to 6 inches, which are combed to lie parallel to each other, producing a smooth, clean look. They are usually fine, tightly twisted ply yarns.

Yarn Index

The Cotlook Yarn Index is derived from our published FOB prices for 20s and 30s counts from India, Pakistan, Indonesia, China and Turkey, each weighted to reflect exports of cotton yarn from the individual country concerned, and expressing that as a percentage of the comparable average values for 2005.  In determining the weightings, we use an average of the exports in the two most recent calendar years for which complete data are available.

Cotlook Yarn Index chart

yarn number

cotton yarn is measured by yarn number, based on how many hanks (840 yards) there are in 1 lb of yarn. The higher the number the finer the thread.

Zhengzhou Commodities Exchange

Zhengzhou Commodities Exchange was established in 1990 and is regulated by the China Securities Regulatory Commission. A cotton futures contract was introduced in 2006, and has become a highly-used, speculative and hedging device in the China domestic market.