By Rutam Vora, Commodity Online
AHMEDABAD: Even as the Cotton production is estimated to surpass last year’s production figures, the prices are expected to hover at higher levels post-April period owing to the rising cotton exports and improved domestic consumption.

India’s textile ministry has recently issued a statement saying that the cotton exporters have sought permits to ship more cotton in February to gain benefit. The international cotton prices have touched highest levels in last two years.

‘Traders sought permits to ship in February 1.32 million bales of cotton, each weighing 170 kilograms, compared with 427,282 bales a year earlier, the ministry said on its Web site today. Exporters registered to ship 5.92 million bales of cotton between October and February, compared with 1.32 million bales in the same period a year earlier, the website stated.

Explore Commodity Online Mobile Services

Cotton prices in New York reached 84.6 cents per pound on March 1, the highest level since March 6, 2008. Futures for May delivery fell 1.44 cents, or 1.7% to 81.85 cents per pound on ICE Futures US yesterday, the biggest drop for a most- active contract since February 5.

Speaking about the cotton scenario in India, SS Talekar, Vice President, Sagar Group of Enterprises – a dealer in raw cotton, yarn, fabrics and textile machinery, informed, “Till recently about 220 lakh bales has arrived in the markets, while 49 lakh bales have already been exported. India had about 71 lakh bales of carry forward stock, of which, we believe, the most has been consumed. As China is running under big deficit and the US has run almost out of stock, India is the only country with surplus cotton. In this situation exporters are getting some of the best returns in past few years.”

Cotton shipments from India have rose significantly during past five months ending February 2010, which jumped to 4.13 million bales from 1.17 million bales a year earlier. Exports are expected to jump to 5.5 million bales this year from 3.5 million a year earlier.

According to Cotton Advisory Board’s estimates, cotton production in India may rise to 29.5 million bales in the year ending September 30, from 29 million bales the previous year.

However, the prices are believed to shoot up by at least 10% after April, as the season gets over. Currently, the prices have been at Rs.27,500 per candy and expected to touch Rs.28,500 per candy in not more than two –three months’ time.

A trader from Jagdish Cotton – a cotton trading firm in Kadi, Gujarat said, “Presently cotton buying is high with predominantly MNCs buying for hedging purposes. International price situation is such that exporters are keen to cash on the opportunity, which is feared to increase domestic prices even at Rs.30,000 per candy levels.”

The industry experts opined that there would be a shortage of quality cotton after April, which would diver up the prices. Denim and other textile industry in India is showing improved trade scenario, which is believed to further push prices upwards.

Post your comment  (7)

Connect:

Post to Twitter

Post to Facebook