July 9, 2012

India's cotton prices likely to surge on tight supplies

As arrival season has come to an end and increasing demand from the yarn makers on the back of the forthcoming festival season, India's cotton price may surge further on tight supplies.

According to traders cotton in domestic market is presently experiencing good demand from mills and also the concern over output due to lower rains in key growing areas has supported the rise in commodity prices. Delayed rainfall has affected the sowing process of the commodity in the key growing areas like Maharastra Gujarat among others and also decline in acreage under cotton crop on lower price realisation for the farmers has also added to the price rise of the commodity.

According to analysts the demand for cotton among the mills has gone up on the back of upcoming festival season which is going to kick start with ramadan and on production concern. In India, cotton production is expected to be around 34.7 million bales of 170 kilogrammes each for 2011-12.

In India's National Commodity and Derivatives Exchange (NCDEX), cotton for February delivery traded at INR1,027.5 (US$18.5) per quintal on July 6 at 1:45 IST.