Indian Cotton Prices Leading To Be Competitive Internationally

0
53

Last week, much needed sunny and dry weather was witnessed in most of the cotton growing areas in India. Daily cotton arrivals improved too.

Cotton arrivals pick up
As per market information, daily arrival was reported at around 35,000-40,000 bales per day from previous week reporting of 20,000-25,000 maximum per day. Out of these arrivals, Gujarat and Maharashtra increased their share.

The weather department has predicted some scattered rains may continue in October as well. If this happens, arrival and quality of running cotton can be affected. Till Diwali, we can expect daily arrival of around 50,000 bales per day on all India basis, if weather remains favorable. Arrivals have been delayed and some of the first picked cotton has been damaged due to continued rains into the first week of October.

Low cotton prices fail to attract buyers
Indian cotton prices continue to remain under pressure and are currently trading below Rs 41,000 per candy Ex Gin/Ex warehouse/28.5+mm/3.6+mic for Gujarat 2018-19 crop. However, demand remains dull. Gujarat 2019-20 crop is being offered at around Rs 39000 ex. Gin by ginners for October 2019 delivery with 10% moisture condition. Mills and exporters do not find these prices lucrative, which are already trading below MSP if we take standard and historical data in our calculation.

Also Read  Cotton Prices Likely To Fall Further: Ind-Ra

Low grade cotton is getting traded around Rs 34,000-35,000 per candy for its 63-67 RD values and whatever moisture is available in market (around 10-11%).

Within India, if we go through the current demand and supply scenario we will find easily supply is going to be good and demand should certainly be steady to slow. Indian prices should trade lower in the domestic market, until Cotton Corporation of Indian does not actively begin purchasing cotton. CCI has started some procurement operations in northern part of India, but the quantities are very small.

Also Read  Domestic MMF Textile Industry Gears Up To Boost Exports

ICE cotton prices turned slightly bullish
International cotton scenario did not change much over the last fortnight. US and Brazil along with India are coming with huge cotton crop numbers. Demand remains subdued from the biggest consumer – China. US-China trade negotiations are lingering with no directional news from either side.

ICE cotton prices traded stable to slightly bullish on technical side on short term basis. ICE December 2019 contract is trading above 61 cents per lbs from last few sessions, changing the technical as well as sentimental ICE bottom from 55 cents to 57 cents and then found a new bottom of 61. From here the market can move towards 63 cents level.

Also Read  US-China Trade War Escalated Last Week

Comparatively higher ICE cotton and lower Indian prices are leading towards fewer opportunities of exporting Indian cotton as well. Higher international cotton markets and Indian cotton available at cheaper price should help spinners to export yarn at competitive prices.

No new major imports bookings have been reported recently. In view of huge crop coming from India, most Indian mills are buying cotton as per needs, with no forward trades happening unlike previous years.

(Vimal Verma is a Cotton Trader)

LEAVE A REPLY

Please enter your comment!
Please enter your name here

7 + 3 =