January 30, 2012

India's cotton cost drops on low China purchases

China's festival holidays brought about lower cotton demand, which pulled down its price by INR500 a candy of 356 kg on Friday (Jan 27).

Local demand was limited, too, as prices were high, a Rajkot-based trader said.

The Sankar-6 variety decreased by INR500 (US$10.04) to INR36,100-36,200 (US$724.9-$726.91) a candy. During the week, cotton shaved off almost INR1,200 (US$24.1) a candy due to low demand. Kapas or raw cotton was down INR20-25 (US$0.4-$0.5) to INR970-890 (US$19.48-$17.87) for a maund of 20 kg here and to INR900-910 (US$18.07-$18.27) for delivery at Kadi. Maharashtra cotton sold at INR850-875 (US$17.07-$17.57) for a maund. About 700-800 trucks arrived in Gujarat from Maharashtra.

The April kapas contracts declined by INR37 (US$0.74) to INR889.50 (US$17.86) for a maund on the National Commodity and Derivatives Exchange, with an open interest of 10,295 lots.

About 69,000 bales of 170 kg each arrived in Gujarat, while 2.23 lakh bales arrived in rest of the country.

In North India, where 28,000 bales arrived, higher selling following sharp losses on the ICE in London and weak kapas futures dragged down cotton. A weak yarn market and strong rupee also weighed on the market. Ready delivery cotton traded at INR3,800-3,840 (US$76.31-$77.11) a quintal in Punjab, at INR3,730-3,750 (US$74.9-$75.3) in Haryana and at INR3,735-3,750 (US$75-$75.3) in Rajasthan.