Weak Demand, Heavy Selling Hit Cotton Prices.

Cotton prices fell by Rs 2,000 per candy (a candy weighs 256 kg) in the last two days across Gujarat. Heavy selling by traders and weak demand in physical market have dent the prices, feel traders.

Unseasonal rains have also ensured huge stocks in mandis. The Directorate General of Foreign Trade (DGFT) is likely to issue a notification on the quota allotment process on Friday.

"Shankar 6, which was earlier fetching Rs 42,000 a candy, was selling at Rs 40,000 a candy on Thursday in Kadi mandi. Yarn manufacturers are not purchasing, owing to the existing carry forward stock and poor demand from the garment manufacturer," said Kadi-based ginner Paresh Haribhai Patel.

The ginner's unit Uday Cotton Industry has an annual capacity to gin 1.2 lakh bales (one bale=170 kg). Kadi is the biggest ginning hub in the country, processing 10,000-15,000 bales daily. The current arrival of cotton in the state is expected to be over 12,000 bales with exporters and traders largely making the purchases.

"The arrivals are more than the previous year's at this period of time owing to unseasonal rains. Farmers are selling the crop even as others watching the market developments," added Patel. Poor demand from finished goods manufacturers and mills is expected to keep cotton prices bearish, feel traders.

On the NCDEX, cotton contract expiring on February 29 traded in a range of Rs 709 to Rs 730 per 20 kg, registering a decline of Rs 30. After India re-opened export of cotton by allowing 10 lakh bales export, traders and farmers were expecting the prices to go up.

"Prices are likely to remain bearish. The macro factors like economic condition and bank rates are not supportive except for bad weather condition in America. Cotton growing in north hemisphere like China, Pakistan, CIS countries will also have a bearing on prices," said Northern India Cotton Association president Rakesh Rathi.

A Maharashtra-based trader said that good quality cotton could touch Rs 35,000 a candy in the coming days. "We don't expect the prices to come back to the previous levels even as the export begins with a huge cotton stock in the country," said Delhi-based VRA Cotton Mills chairman Vinod Ahuja.

Source : economictimes.indiatimes.com