Cotton prices have seen an increase by 10% in just about a month over buoyant market outlook. The uptrend in the prices of fibre crop is supported with good export orders as well as strong demand for domestic consumption with farmers releasing the cotton in a staggered manner, who are holding on to the crop expecting the prices to move up further.
Ruling at Rs 43,000 per candy (of 356 kg each), cotton prices have increased by Rs 4,000/candy in just about a month from Rs 39,000/candy due to the bullish sentiments in the market, said Bharat Wala, president, Saurashtra Ginners Association.
The MSP of long staple cotton is Rs 3,900/quintal. Farmers are currently getting about Rs 4,800/quintal to Rs 5,200/quintal. The arrival of cotton is very limited keeping the prices firm.
As per the statistics available with the Cotton Corporation of India (CCI), the arrival of raw cotton till January 26 is less by about 17% as compared to arrivals during same period of previous year.
Traders, ginners claim that the arrivals are restricted due to hoarding capacity of farmers. Equipped with latest market information, the big farmers are releasing cotton in the market in a staggered manner, said LV Loyalka, in-charge, operations, Central India, Olam Agro India.
Along with the big farmers/traders, ginners are also holding on to a big quantity of cotton expecting the prices to move upward in the days to come. Pradip Jain, president, Khandesh Gin-Press Association said that at the current prices of raw cotton, it is not affordable for ginners to sell cotton bales.
According to BS Rajpal, MD, Aurangabad-based Manjeet Cotton , demand from China, the biggest buyer of Indian cotton, is not much. But the exports to other countries have helped keep the prices firm. There is good demand for Indian cotton from Bangladesh and Pakistan, for premium quality cotton. The local demand from spinning mills is also good.
However, there are mixed estimates about the cotton prices. As per one view, the cotton prices are likely to come under pressure from mid-February as the buying by mills declines due to financial year-ending procedures. While, prices are also expected to increase due to lesser carry forward stocks. The prices are also expected to increase further from April due to 'hands to mouth' situation of Indian spinning mills.
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