Despite cushioning the impact of global cotton demand on the face of an appreciating rupee, India's local cotton prices remained strong in the second half of April. Barring some minor fluctuations, the prices for cotton remained high on the domestic front. The strengthening of the INR against the US dollar has resulted in an upward revision of India's cotton export prices.
Higher export prices has however, pushed the availability of cotton in the domestic market to healthy levels. In the near future, Indian rupee is expected to remain strong against the US Dollar which means lower export of the commodity and better domestic supply. Short term expectations indicate that domestic cotton prices will go down as fibre availability is healthy. Besides, a host of spinning mills has imported the fiber in wake of high domestic prices. On the arrival front, total cotton arrival in the country till date is estimated to be around 29.5 million bales and current arrival is estimated to be between 145,000- 155,000 bales per day across India. Current domestic price of benchmark Shankar-6 variety was recorded at around Rs. 42,900 per candy (355.6kg, on 25th April 2017) which is marginally lower if compared to mid-April price.
On the global front, cotton prices gained with the backing of spinning mills and short term covering due to softer US Dollar. The momentum in the US cotton markets remained strong. The benchmark A index move upward of 88 cents mark. The key data on the crop from USDA's latest forecast indicates that world cotton production to be 106.3 million bales up from the earlier estimates to 105.7 million bales (of 480 lb, last season's production was 96.7 million bales). Consumption estimates increased to 112.6 million bales from earlier forecast and ending stock revised upward to 90.9 million bales from earlier figure of 90.5 million bales.
To look at the price trend, during April second half, 'A' index started moving upward and breached 88 cents per pound mark. The index fluctuated above that mark and recorded at 88.30 US Cents on 25th April. 'A' Index was at 78.55 US Cents in December 2016 end and was at 69.55 US cents per pound in December 2015 end.
On the yarn front, cotton yarn prices increased as the fiber prices gained. Also, weaker US Dollar in major yarn exporting countries has led to higher price offers. The demand for cotton yarn seems to have revived and buyers are negating for better prices.
Cotlook 'A' Index: 88.3 (As on 25th April 2017)