By admin       2018-09-10

Cotton prices in the domestic market have firmed up on reports of lower carryover stocks in the coming season and the lower crop estimates by most cotton bodies in the state. Cotton prices are currently in the range of Rs 47,000 to Rs 48,000 per candy and, according to traders, if the rupee continues to fall, prices of cotton are likely to go up further, industry people said. Higher minimum support price (MSP) along with a record low carryover stock and high demand in the domestic market has pushed the prices up in the last few days. According to some cotton ginners, millers already have some 18 lakh bales stock on hand and the carryover stock has reduced to some 22 lakh bales at the start of the new season, which commences from October. With reports of lower crop estimates, prices are likely to remain firm as the season starts, industry people said. The Cotton Association of India (CAI) had previously predicted domestic stocks at the end of 2017-18 season at 22 lakh bales, which is the lowest in about a decade. According to traders with 20-22 lakh bales of carryover stock, India is having its lowest stock in the past ten years. With a similar trend seen worldwide, there could be a further increase in prices, traders felt. Arvind Jain of the Maharashtra Cotton Ginners Association said that the prices were stable during the October-November-December and January period and after this the consumption of Gujarat increased. Coupled with this, the estimates of a crop size of 400 lakh bales came down to 380 lakh bales and a rise in export from an estimated 60 lakh bales to 70-72 lakh bales led to a hike in prices to `48,000 to Rs Rs 49,000 per candy. However, with the climate opening up, hopes have now risen among traders that the new season arrivals may commence from the first week of October, which could see prices stabilising to an extent, he said. Moreover, since the government had increased the MSP, there was a fear among the traders that farmers would not bring cotton into the markets soon and, therefore, the hike in prices is a temporary phenomenon, he said. In its recent statement, the International Cotton Advisory Committee (ICAC) said that the 2018-2019 season is likely to witness 3% drop in production, 3% increase in consumption and 10% decrease in global stocks. ICAC mentioned that this will bring down the world’s cotton reserves to a level not seen since 2011-2012. On this, the global apex body said that decrease in the stocks world over will mainly come from a draw-down in China’s warehouses. If traders wish to import top quality cotton of the Pima and Giza variety from Australia, Turkey and America, prices are in the range of Rs 71,000 per candy and, therefore, domestic trade has picked up within the country, traders said. Increased demand from China, the largest consumer of cotton, is likely to lead to a rise in global consumption. According to the ICAC, from March to August 2018, Chinese State Reserve sold more than 20 lakh tonne of fibre, reducing the stock to 86 lakh tonne.

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