NEW DELHI: Cotton prices in India, the world's second-largest producer, have firmed up by 10% in the last fortnight on falling supplies in the spot markets and exports by mills. Prices are expected to remain bullish with farmers holding the crop due to lack of cash flow in the market, said trader and ginners.
On Saturday, Shankar 6 cotton prices in the Rajkot mandi was trading at Rs 40,000-41,000 per .candy of 356 kg each from Rs 37,500 .38,000 per candy a fortnight ago.
“Everyone is trying to meet their export shipment deadlines and domestic demand and prices remain firm. I expect bullish sentiments to prevail,” said Dhiren Sheth, director, CA Galiakotwala, a leading cotton exporting company.
Traders said prices could see an upward trend of 10% in the coming days with exports and domestic demand picking up amid fall in arrivals in mandis. Further, news of Cotton Corporation of India stating that it will procure 1520 lakh bales of 170 kg each of cotton in the year ahead too has supported prices, said a Mumbai based trader.
Currently, major purchases were happening from Gujarat, Maharashtra, Andhra Pradesh, Punjab and Karnataka.
Bharat Vala, president of the Saurashtra Ginners Association said that cotton prices would remain firm for the next one month, till currency flow improves. “Farmers want cash rather than cheques and is hence holding the crop. There is demand and exporters from Louis Dreyfus, Glencore, Khimji Vishram & Sons, Jaydeep Cotton and others are in the market, but no one is selling,” said Vala.
Exporting companies said that they had signed future contract for delivery of cotton by December, which they were unable to meet due to demonetization. “We have got some additional few weeks to meet our export orders, but the prices are now very high,” said an exporter from Gujarat.
Ashok Kapoor a cotton trader from the Bhatinda mandi in Punjab said that mills from Vardhman, Trident to Nahar were buying on a daily basis. “Everyone has become a fence sitter and buying as per their requirement rather than buying for 5-6 months in one go as prices are firm from the usual,” he said.
As per 1st advance estimates, of the Agriculture Ministry the estimated production of cotton during kharif 2016-17 is going to be 32.12 million bales (of 170 kg each) as compared to 30.15 million bales during 2015-16.