March 1, 2012
As farmers lessen supplies to offset the lower demand from domestic textile and yarn makers, India's cotton prices are likely to remain steady this week, dealers and traders said.
The prices fell by INR1,600 (US$32.57) per candy last week. Daily arrivals in spot markets have fallen to 130,000 bales from over 200,000 bales in January.
Farmers are not willing to sell at this price and could hold supplies, which could provide some support to falling prices, Arunbhai Dalal, a trader based in western Gujarat state.
"... Peak arrival period is coming to an end, and export demand which remained weak in most part of February, is likely to recover in March," Dalal said.
India's cotton output in 2011/12 year ending in September is expected to touch 34.5 million bales of 170 kilogrammes, a record high for the second straight year.
Traders expect export demand from China, the largest consumer of the fibre, to increase in the first week of March, which could provide some support to falling prices in the backdrop of higher production this year.
India, the world's second largest producer and exporter of the fibre, has shipped 4.4 million bales of 170 kilogrammes each so far in the current cotton year that began in October, with China accounting for nearly 90% of the exports, the government data showed last month.
Last month, India raised its cotton shipment forecast to 8.4 million bales for the current cotton year, from eight million previously.
On Tuesday, the most traded Shankar-6 variety was unchanged at INR34,000 (US$692) per candy of 356 kilogrammes each, according to data from the Cotton Association of India, a trade body.
Cotton arrivals in the domestic market this season fell 4.45% to 22.34 million bales until February 26 as against 23.38 million bales in the year-ago period.
