August 22, 2012
India's cotton prices likely to remain steady this week
As a tight supply situation in the spot markets could outweigh improvements in rains and lower buying by mills, India's cotton prices are likely to remain stable this week.
On Tuesday (Aug 21), the most traded Shankar-6 variety closed up INR200 (US$3.6) to INR38,400 (US$691) per candy of 356 kilogrammes, data from Cotton Association of India showed.
At 1116 GMT, the key August cotton contract on the Multi Commodity Exchange (MCX) was trading up 0.22% at INR17,830 (US$321) per bale of 170 kilogramme each on Tuesday (Aug 21).
"Mills, waiting for new crop arrival, have slowed down purchase, but it is unlikely to have much impact on prices as stocks available with traders are very low," said Arunbhai Dalal, a trader based in the western state of Gujarat, top grower of the fibre.
Cotton price rose over 16% since June 1 on fears that scanty rains could trim acreage. Recent spell of good rains in Andhra Pradesh, Maharashtra and Northern India, has eased the fear of steep fall in the fibre harvesting in the next season beginning on October 1.
Most farmers in India plant cotton in the months of June and July with the arrival of the monsoon season and begin harvesting after October.
Hopes of improvement in supplies as the new cotton crop from northern India reaches the market in the second half of next month capped the upside movement in prices, Dalal said.