The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1919-01-25
THE COTTON MARKET.
Gwathaney & Cos Analysis of the.
Present Situation.


GwatIasneys & Cos Analysis of the
Present Situation.
New York, Jan. II, 1919.
The past week has been one Of eX-
tensive liquidation in the cotton mar
kets. The speculative long interest
tproved TO pe much larger than was
generally Supposed and its liquidation
has been accompanied by very con-
| siderable volume of short selling and
| to some extent by selling Of contracts
against unhedged stocks Of cotton
held by factors and growers IN the
South. Sentiment has become eN-
trenely bearish and has resulted in
an unsettled condition with prices
declining to the lowest figures reached
in several months and more t]'an $50
per bale below the high points ecent-
iy touched. The majority Of spots hold
ers appear TO be quite Indifferent to
the weakness which has developed III
the future markets, and generally
speaking spot cotton can be bou@ht
only at the price levels which existed
prior to the decline of the past week
The persistent Indifference of spot
markets to the weakness in futures
has, however, become more pronounc-
ed as the decline has progressed. and
al the present levels the South has
practically stopped Offering cotton.
The very wide discount at which fu-
lures are now selling under the
Southern spot markets IS, in fact, the
outstanding feature Of the present sit
uation. This depreciation in the val
ue of our contract is undoubtedly very
largely due to the fact that many Of
the lower and more undesirable
grades which are tenderable here are
at present practically, unstable IN
shis connection the trade is antlcl-
pating some form Of legislation
amending the Lever act in the not
distant future in an effort to correct
this condition by eliminating the low
er grades from the contract.
There are undoubtedly, however.
other causes which have contributed
largely to the decline. The period
Of uncertainty and readjustment
which has followed the war is still
causing tmidity on the part Of buy
ments The government has been
forced to cancel war contracts Of al
descriptions and large supplies of al!
kinds which have been accumulated
FOR war purposes are now, being
liqu;dated ut a less. This is disturb
inr to normal trade conditions and
has tended to encourages generally a
strong bearish sentiment which is re-
flectcd in all markets for commodi-
ties and securities. The effect Of
these conditions will, we believe,
however. be of short duration par
ticularly in this country. where trade
ma. soon be expected to recstallisl
itself on a peace basis. The industries
Of foreign countries. and to some eX-
t"nt oar civn. have been diverted in
the last few years from the civilian
to military activities and the task Of
supplying the civilian world With MGR
chand;se now Qevolvcs largely on the
United States For this reason we
look for a genera! and substantial re-
vival in the domestic spinning indus
try during the spring months. More
over all restrictions on tonnage now
IN ,osed by the British government |
viii be removed of March /. and
there is undoubtedly a very large
amount of cotton awaiting export at
that time when exporters are ganer-
ally expecting a material reduction in
ocean freight rates. In fact VIC be- |
lieve that the export movement Will |
thereafter reach nluch greater pro-
portions than the trade is nov ger
ertlly anticipating.
Il is. Of course possible that the
present liquidat;rg and general sell
ing movement has rot yet run its
course. However. we see no change
in the Fundamentally bullis:l situa
ton in cotton. We believe that it
Will require q long period, possibly
years. for the present imitation in
noney to disappear. Meanwhile the
grover is in a very strong position
financially and will we believe be
able TO hold the balance or his sup
plies for the very strong demand
which We expect to develop during
the spring months.
Yours truly.
Gwata!ncy < Co.
Paris 'Tucsaay Jan. 21--IIai.;s--
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