Cotton prices to remain range-bound in CY16

The report said domestic cotton stock position will remain adequate even if the production declines by up to 15 per cent in CY 2015-16, and hence domestic prices are expected to remain stable in CY 2015-16.

ICRA estimates suggest that even if the domestic cotton production declines by up to 15 per cent to 32-33 million bales, the domestic cotton position will remain adequate at 1-2 month of consumption which will keep the cotton stocks comfortable and prices range-bound.

However, in an unlikely scenario of decline in cotton production by more than 15 per cent in CY 2015-16, the domestic demand supply situation would turn unfavorable for spinning industry and result in an increase in cotton prices.

Alternately, an increase in domestic cotton production too will also have limited impact on cotton prices realized by farmers due to MSP operations by CCI; however the domestic and international market prices for spinning mills will be driven by the rates at which CCI offloads the cotton. (SH)

Fibre2fashion News Desk – India