The Hindu Business Line : Forward deals begin for new cotton crop

FORWARD transactions of new cotton crop have started in the Northern region, in States such as Punjab, Rajasthan and Haryana. Forward prices of select cotton varieties such as Bengal Deshi and J-34 have come down by around Rs 25/50 per maund (Rs 37.32 kg each) in the last four days, due to favourable weather condition for new crop, weak overseas market and limited buying interest from mills.

The Punjab J-34 is being quoted at Rs 2,150 per maund for mid-September deliveries and Rs 2,005 per maund for full October deliveries. The Rajasthan J-34 is being quoted at Rs 1,920/1,925 for full October deliveries and Haryana at Rs 1,930/1,940 per maund for full October deliveries.

"Forward transactions for the new crop are reported only in the North. The main buyers are mills. Buyers have disappeared because new crop arrivals in Punjab are expected to come in by end-September," a local dealer said. "Since many mills that are short-covered are likely to enter the market in the beginning of October as the new crop begins to come in, prices are expected to drop by early November," he said.

"In the overseas market, there is ample unsold stock in the US and elsewhere. Also, the new crop worldwide looks like it is going to be large," a broker said.

Over the last fortnight, good rains in major cotton-growing areas have made the new crop healthier. .

There are reports of bright sunshine in Andhra, Karnataka, Punjab, Haryana and Rajasthan and scattered rain in Madhya Pradesh, Maharashtra and Gujarat, which is beneficial for the standing crop. Upper and Lower Rajasthan experienced good rains last week. In Madhya Pradesh and Maharashtra, bright sunshine is needed otherwise the crop might suffer.

In the South, Karnataka and Andhra Pradesh, producer of long and extra long staple cotton, have been benefited both in terms of quantity and quality of weather conditions.

"In Gujarat as a whole, the cotton crop position is good." Mr Mitesh Shah of Kanam Cottons said. "In Saurashtra region (barring Junagadh, Amreli and Porbander), there is no report of loss to standing crop. The overall outlook for crop progress is good and arrivals should start by October first week, according to sources in Manavadar and Gondal. Kutch requires one good spell of rain before we can call the crop excellent over there," Mr Shah said.

Full-fledged arrivals in Gujarat are expected by the first or second week of October.