By admin       2019-02-22

February 22, 2019 - Cotton prices are expected to rise marginally and remain strong for 2019 after rising substantially in 2018. The current weakness is also seasonal in nature. The prices are expected to average at `125-127 per kg for cotton season (CS) 2018-19. Further, prices are also expected to be supported by weakened rupee and rising consumption in both the domestic and overseas markets. Prices would also be affected by the ongoing trade talks between the US and China, CARE Ratings said in a note. In view of high cotton prices and competition from lower-priced Bangladesh yarn, domestic manufacturers, especially the smaller yarn ones, are expected to be affected. However, the medium to long-term decrease in yarn demand from China is expected to be offset by improvement in the demand from other nations, the note added. Early in February 2019, the Cotton Advisory Board (CAB) revised its cotton output estimate to 330 lakh bales (1 bale=170 kgs) from the previous estimate of 335 lakh bales for CS 2019, beginning October 1, 2018, for the third time. This downward revision in production was largely attributed to the water shortage faced by cotton crop in southern states, including Telangana, Andhra Pradesh and Karnataka, and pink bollworm attack. There are reports that farmers had already uprooted their crop, denying a chance for additional pickings. The current year’s output estimate is lower by 9.5% year-on-year, against the output in CS 2018 which was 365 lakh bales. According to the CARE Ratings’ note, cotton prices have come off last season’s high and are trending lower at `125 per kg for Shankar-6/Shankar-4 and `117.8 for J-34(Sg) on a month-on-month basis but are still higher y-o-y. Spot prices on the Multi Commodity Exchange of India (MCX) have also softened. Lower prices have been attributed to poor offtake by mills, which have excess yarn stocks, amid rising arrivals and sluggish exports due to slower demand from China. Further, as indicated by the Cotlook A index, international prices have also softened. However, this decline has negatively affected sentiment as there are reports of the Cotton Corporation of India having procured 8.5 lakh bales of cotton, against 3.6 lakh bales bought in the similar period last year. In line with the prices, cotton yarn prices have also witnessed sluggishness during the period.

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