January 19, 2012

India's cotton prices remain flat

Stagnant demand overseas for India's cotton causes prices to remain the same this week, according to investors.

"Not much movement is expected in cotton prices as traders are not willing to buy at such high prices, while farmers are reluctant to sell at lower rates, preferring to hold on to supplies," said Parth Mehta, joint managing director of Bhadresh Trading, a leading exporter of the cotton.

On Tuesday (Jan 17), the most traded Shankar-6 variety fell INR100 (US$1.98) to INR37,600 (US$747.51) per candy of 356 kg each, according to Cotton Association of India.

Arrivals in spot markets are also lower, which indicates that the yield and overall production could fall, helping prop prices in the backdrop of falling export demand, traders said.

State-run Cotton Advisory Board has projected India's cotton harvesting in 2011-12 season to be at 35.6 million bales, up from 32.5 million bales in the previous season ended on Sept. 30.

Cotton arrivals in India till January 8 in the 2011-12 season fell by 19.6% to 11.9 million bales of 170 kg each, compared with 14.8 million bales a year ago, state-run Cotton Corp of India said last week.

The government estimated nearly eight million bales exports in the current cotton year, beginning on October 1, but some exporters feel the target is unlikely to be met in the wake of recent economic turmoil in the US and Europe.