February 22, 2012

 

India's cotton prices may fall on low demand

 

 

India's cotton prices are forecast to drop this week on low overseas demand and on rising arrivals in spot markets.

 

"Buying from China has slowed down and demand from Bangladesh has suffered as textile mills there are facing financial problems," said Ritesh Agrawal, chief executive officer and managing director of Wisdom Cotton, a Kolkata-based trading firm.

 

"We expect cotton prices to fall by up to INR2,000 (US$40.67) per candy (of 356 kg) on weak export demand in next 10 days."

 

Neighbouring China and Bangladesh are the top two buyers of Indian cotton.

 

India has shipped 4.4 million bales so far in the current cotton year that began in October, with China accounting for nearly 90% of the exports, government data showed last month.

 

"Nearly half of the surplus cotton is still left to be shipped, and it will be very difficult to export, seeing the weak trend in overseas market," said Agrawal.

 

Last month, India raised its cotton shipment forecast to 8.4 million bales for the current cotton year, from 8 million previously.

 

China's cotton imports in January totalled 326,500 tonnes, down 17% from a year earlier, according to an industry website, citing customs data.

 

Traders are concerned that slowing economic growth in the United States and Europe, the biggest buyers of Chinese textile and apparel exports, could hit cotton demand.

 

On Tuesday, the most traded Shankar-6 variety fell 200 rupees to 35,400 rupees per candy, according to data from the Cotton Association of India, a trade body.

 

Cotton arrivals from the new season crop fell by 7.4% to 19.76 million bases of 170 kg each from 21.35 million bales a year ago, state-run Cotton Corporation of India said last week. (Reporting by Deepak Sharma; Editing by Aradhana Aravindan)