The Hindu Business Line : Cotton prices may rule lower

COTTON prices may rule lower in the next few days because of expected higher import inflows, hopes of monsoon revival and limited buying interest from mills.

Select varieties such as Bengal Deshi, V-797, J-24, MCU-5 and NHH moved up by Rs 500/1,000 per candy in the last ten days. Other prominent varieties such as Shanker-6, H-4 and LRA increased by Rs 300/400 per candy, sources said.

"Cotton prices are firm despite cheaper foreign cotton being imported in a substantial way," a dealer said.

Over 6-lakh bales of imported cotton are expected to arrive in the next two to three months.

Major portion of imports will be from the Commonwealth of Independent States, Greek, Brazil, West Africa, Tanzania, America and Australia.

Reports say that import contracts have been made at 53-58 cents per pound for August/September/October delivery.

The December contract at NYBOT settled 52 points lower at 44.52 cents per pound on Tuesday, after hitting a fresh contract low of 44.40 cents for the second consecutive day this week.

"Imports may touch 20-lakh bales this year," a leading importer said. International prices are ruling lower than that in the domestic market. Besides its cheapness, much lower trash content and good uniformity of imported cotton are an added attraction.

"As the dollar is gathering strength, it is advisable that these cotton are bought well in time else the price advantage of these foreign cotton may diminish," an importer said.

The new crop conditions are not much good and majority of the mills are snapping up available supplies especially after the budget, which has been quite favourable for the textile industry, a local dealer said.

Monsoon is active in some parts of the country, which might be of some help to cotton crop.As the rough estimate, unsold stocks are expected to be around 6-lakh bales, which includes 1.5-2-lakh bales of good quality cotton.