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Export deliveries impacting cotton prices - experts

07
Nov '09
Since mid-October domestic as well as export prices of cotton in Gujarat, which is the biggest producer of cotton in India are on fire. The first price rise came in the festive season of Deepawali, when cotton traders shut down their business for a few days.

In that period between October 16 and October 24 prices of a cotton candy (1 candy=355 kg) flared up from 23,200 per candy to Rs 24,200 on October 26, a hike of Rs 1,000 in a matter of just 10 days.

Prices of cotton have once again scaled up after that and touched Rs 24,700 per candy on November 4. To get behind the reasons of the bullish trends of cotton, fibre2fashion took the initiative to speak to a few cotton traders of repute in Gujarat.

First we spoke to Mr Hiren Patel of Patel Ginning Pressing Pvt. Ltd. in Botad, who said, “There is less availability of the cotton crop due to deficient rainfall in this season and as Gujarat Kadi Cotton Association had estimated that this season crop will come to around 10 million bales, but the actual figure could be around 6.5 million bales, which means 35 percent less and since exporters had booked cotton on export forward prices, the delivery of the same is being done now”.

Mr Paresh Valia of Asha Cotton Industries, Mahuva was of the opinion that exporters are short covering their positions, they are buying in huge quantities, since shipments begin in the month of November and the cotton arrivals in the market is only 40,000-45,000 candies daily against an estimated arrival of 80,000 candies per day and cotton production is estimated to be low this year, which has led to a spurt in cotton seed prices, which is also one of the reasons for the flare up in prices of cotton.

Mr. Jadavbhai of C. K. Industries, Rajkot was of also the firm view that November is the time when shipments to overseas markets begin for consignments booked under futures contracts in previous months and also because the cotton crop is expected to be less by 25-30 percent in the current cotton season, which are the main reasons for hike in cotton prices.

When asked whether they expect imports of cotton to increase in near term, Mr Patel said that he does not expect so, as currently they are exporting 450 Bales per day as well as from all over the Botad, the daily figure is around 2,000 bales, while Mr Valia said imports would not increase, because production is not only bad in India but outside India as well. In China cotton output is estimated at 60 million bales against a projected 75 million bales and the situation is same in the US.

Click here to view domestic and export price trends.

Fibre2fashion News Desk - India


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