资讯 1 10 英文网 307 Feature 548779 The markets for last few months have been bearish 2015-05-13 15:47:17 yangfang
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The markets for last few months have been bearish
2014-07-16

J. P. Jain  

Vice President (Marketing), TT Limited, India

 

The markets for last few months have been in a bearish mode due to the falling cotton prices especially in the futures market and the anticipated fall in Chinese cotton prices. This has lead to purchases being hand to mouth and buyers being very cautious as they fear a fall in cotton prices could lead to fall in yarn prices. Mills are under pressure and are currently reeling under losses as near term cotton hasn’t corrected. Mills are further pressurized due to the currency appreciation of India and Pakistan.


There is no drop in demand as such in garments – the demand slow down is mainly due to bearish expectations and hence squeezing of inventory pipelines.

In today’s world the complexities of the market are so baffling and sensitivity to news flow is very high, that its very difficult to take any long term view. The basis of such views is shifting as fast as sand. Hence we are just endeavoring to analyze things as they stand today and present them in a defined manner. Based on current circumstances, we would like to present the bullish and bearish factors to enable you to take a informed buying decision:

BULLISH FACTORS:

  • Pipeline inventory is at the lowest possible level. In a recent study by leading Chinese consultant, they stated that imported cotton stock is at just 20% levels of what it was last year in the same period. Its a well known fact that low inventory levels are the biggest reason for spurt in prices.
  • Eid is about to get over and summer holidays would be over in a month’s time – typically activity picks up after this period of festival and holidays
  • New York Futures have come down considerably from a peak of 95 cents to about 68 cents in a matter of a few months. A technical rebound is imminent and further considering the levels of last 2 years, this seems to be close to the bottom.
  • India is suffering from drought like conditions, and sowing of cotton fibre till date is just 50% of last year. Further carry forward stocks of cotton are at abnormally low levels.
  • India domestic market is picking up from an all time low level, domestic demand is expected to grow by 10% which last year was insignificant.
  • Pakistan import surplus has reduced due to energy crisis and improved domestic demand of yarn for more production of value added exports
  • China’s expected fall in cotton reserve price has already been built in
  • Global growth rates are as per expectations, there has been no change as such which could lead to a downward adjustment in consumption. Even retail sales figure etc don’t show any reduction in garment buying across the globe.
  • Spinners are losing money today, hence under immense pressure to increase prices at the slightest opportunity


BEARISH FACTORS

  • The fear of Chinese reducing their prices very fast to liquidate their stock. It is expected to reduce its reserve prices from 17250 RMB/MT to 16500 RMB/MT. This is already anticipated and built in prices.
  • China change of policy in cotton procurement, which could lead to a over supply situation in global market – this again has been built in and is the reason for a almost 33% retracement in prices of cotton in the Futures Market.
  • New York Futures indicate lower cotton prices in the coming days.