MUMBAI (Commoditiescontrol) - In the current cotton season (2015-16), domestic markets have been subjected to frequent fluctuations in both, near and long-term fundamentals. As a result of which, market participants are finding it difficult to hold a fix bet on the commodity.
One of the most important aspect is the new crop arrivals in domestic markets this season. As Mr. Arundalal, a veteran trader and analyst from Arunkumar & Company puts it, all India cotton arrivals till 31st January, 2016 stood at around 170 lakh bales (1 bales = 155-160/kg), down 19.04 percent from about 210 lakh bales as on 31st January, 2015.
Mr. Arundalal foresees domestic markets to witness arrivals of around 323 lakh bales during the current season from an acreage of 116 lakh hectares.
According to him, domestic consumption would decrease 2-3 percent this season. However, the marginal fall in consumption would be easily offset by an improved export prospect as India’s cotton exports are likely to touch 60 lakh bales against 56 lakh bales last year.
But commenting on yarn and garments exports prospect, he said fluctuation in U.S. Dollar would determine the export movement in these two important segments. Government has estimated garments and yarn export to rise 6-8 percent this season compared to last year.
Besides, volatility in crude oil prices would also decide the market movement as weakness in crude oil prices make PSF and polyester yarn more competitive to cotton yarn.
According to him, India recorded export registrations of more than 47 lakh bales till 31st January, 2016, with major destinations being Bangladesh, Indonesia, Vietnam and Pakistan.
Mr. Arundalal feels that now is the right time to purchase good quality cotton in bulk quantity in order to build inventory considering the emerging cases of quality variation, which is leading to increased parameters in doing business. Hence, increased chances of more price differentiation in times to come.
Note: Average weight per bale = 155-157/Kg
(By Commoditiescontrol Bureau; +91-22-40015522)
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