The Hindu Business Line : Cotton prices may rule weak

COTTON prices in the domestic market may rule weaker in the next few days on lack of fresh and firm buying interest by millers, continued offerings by stockists and ginners; and reports of good sowing in cotton growing areas.

Cotton spot prices were down by about Rs 300-700 per candy for the past couple of days as some ginners and big stockists turned active seller. The price fall was chiefly in Kalyan, Shankar-6, H-4 and LRA cotton varieties. Stocks-on-hand with ginners and stockists are reportedly low, traders said.

``Domestic prices are not following world prices, as they should. Foreign cotton is now cheaper than Indian varieties in many types. It is only in lower count cottons that Indian cotton can stand-up to world competition,'' a leading cotton broker said.

``The situation is that there were more seller than the buyer,'' he said. There are reports of some forward sell by Gujarat-based merchants in Shankar (new crop) cotton for August delivery.

``Cotton prices will slump in a big way in the next few days,'' a dealer said.

In yarn sector, there are no buyers even at lower rates. Major yarns varieties prices in the southern regions have declined substantially by Rs 10-12 per kg recently. The situation is really scary all around.

New export business is now at low ebb and import of foreign cotton has picked up. Most cotton mills have bought some parcels of West African, American, Brazilian and CIS cottons.

``Cotton sowings are likely to be hefty. Now that rains have reached everywhere we expect hoarded cotton stocks to come out for sales. Mills by and large are well covered and big buying is not forthcoming,'' he said.

Good sowings in cotton areas is being reported. Early BT seed sowings are expected to come to markets in August. Sowings are proceeding in a big way and final acreage will definitely be larger.

There are reports that sowing has started in a big way in Vidarbha, Marathawada and other parts of Maharashtra.