The Hindu Business Line : Cotton prices fall on increased supply

COTTON prices in the country have come down in the last one month, on increased supply, restricted buying interest from mills and expectation of imported cotton.

Except MCU-5, the prices of major varieties, including Bengal Deshi, NHH, LRA and V-797 fell Rs 200-700 per candy (356.56 kg) in the last one month. On the other hand, MCU-5 grade has gone up by Rs 500 per candy and Shankar-6 has ruled steady, according to trade sources.

"Big mills who are good paymasters have covered their cotton for requirement up to July/August. Now that even Shanker-6 is available for September, most good mills are least interested in buying cotton," he added.

Cotton arrivals in the northern region have declined to 300-400 bales per day. There are reports of unsold stocks of about one-lakh bales, including Bengal Deshi and poor quality J-34.

In Maharashtra, heavy arrivals are still continuing. In Gujarat, arrivals have picked up.

"Some ginners have stored a good cotton varieties such as Shanker, Brahma and a little quantity of MCU-5 for future gains. These cottons will come into the market either at a high price or following reports of better sowings," a Gujarat-based dealer said.

Good cotton is scarce and does not go down with other ordinary grades. The premium for good cotton is increasing. The strengthening of the rupee against the dollar has begun to increase the chances of imports and it is one of the factors that is holding the cotton market from rising too much.

"Since the rupee is now becoming stronger against the dollar, there are good chances of import booking in a big way," a leading broker said.

Some business of cotton imports from West Africa and the US have been reported at 66to 68.50 cents per pound.

One thing is certain and that is cotton acreage for new sowings is bound to go up as the cotton farmer has received very good prices this year.