Bullish-Bearish Factor In Domestic Cotton Market

MUMBAI (Commoditiescontrol) - Cotton prices in the month of July recorded gain of over 7 percent, however receded more than 5 percent from high of 49,500/candy (356kg each). The recent fall in prices were mainly due to poor demand from mills as they have opted to wait-and-watch for correction due to huge losses in production of yarn followed by poor domestic and overseas inquiries.

There is huge uncertainty in the domestic market about future outlook and to find out the factors, which will play important role in deciding the trend, commoditiescontrol has prepared a list of bullish-bearish factors: -

Bullish Factors:
1. Cotton Acreage Likely To Plunge At Least By 10%.
2. New Crop Flow Will Get Delayed Due To Late Monsoon Arrivals In Key Growing States.
3. Tight Supply Will Further Persist As The Inventories Are At Its Lowest.
4. Weather Risk Premium To Stay In Cotton Prices Due Uncertain Weather.
5. Good Monsoon Across India Will Boost Indian Economy Which Will Result In Increased Demand For Textile Products.

Bearish Factors
1. Yarn Market Is Stagnant And Inventories Of Yarn Is Rising With Spinners.
2. Price Gap For Cotton Available To Indian Spinners And That Of Chines Spinner Decreased Drastically Which Would Make It Very Difficult For Indian Spinners And Fabric Manufacturers To Compete With Their Chines Counterpart In International Market Like Europe And America.
3. Further Ample Supply Of Cotton To Chinese Mills Will Result In Increase In Supply Of Down Stream Products Such As Yarn And Fabric From China Which Will Cap The International Prices.
4. Higher Cotton Prices Resulted In Shift Of Demand From Cotton To Other Man Made Fibers Their By Reducing Demand For Cotton And Cotton Yarn.
5. Due To Volatile Markets Since Last Year Many Players Have Incurred Losses In Market Which Has Resulted In Cash Crunch In Market.
6. Strength In India Currency Will Make India Cotton & Textile Product Expensive To Overseas Buyers, Whereas China Will Get An Edge Above India Due To Depreciation In Yuan.

(By Commoditiescontrol Bureau; +91-22-40015533)