The Hindu Business Line : Cotton market clueless amidst claims on output

Will Gujarat crop size undergo further modification from what was originally projected at the beginning of the season? Are there attempts to downsize Gujarat's anticipated output of 100 lakh bales or slightly more at the beginning of the season to 80 or 85 lakh bales only?

Or the pick up in cotton arrivals from Maharashtra and Andhra Pradesh and competitive offering from the cotton trade from the northern region comprising Punjab, Haryana and Rajasthan whose cotton quality is projected to be superior this time compared to last season are really strong enough to pale the Gujarat cotton this time?

These are suggested as the speculative factors by the market responsible for current stalemate in the cotton market where prices of cotton from Maharashtra and Andhra Pradesh have begun to come down. Further more, the current crop from Punjab is also seen to have better fibre quality in terms of their superior spinnability factor unlike last year.

Trade sources here say while Gujarat cotton price is hardening, enhanced crop arrivals in Maharashtra and Andhra Pradesh have rendered the prices of cotton from these States easier. Maharashtra and Andhra cottons are cheaper almost Rs 1,000 per candy (355.65 kg) compared with Gujarat's Shankar-6 whose prices have gone up by Rs 400/Rs 500 during the same time.

"We are hearing reports from the market that the ginners in Gujarat complain that higher price quoted by the farmers for their kappas cotton is not acceptable to the ginners who feel they will end up in loss if they procured at that price," sources in the local cotton trade here say.

Gujarat farmers have scaled up their raw cotton prices by some 12 per cent from last year's prices, despite that State's cotton yield this time is billed to be quite high compared to last year. This has really come as a surprise in the market, according to the sources who maintain that the raw cotton of Shankar-6 variety is this year being quoted at Rs 460 per maund (37.32 kg) compared with Rs 412 last year. The ginners in that State are reluctant to buy raw cotton at this rate saying that their margin will erode if they paid this price.

The farmers in Gujarat also hoped, the sources further added, that Shankar-6 variety being most preferred one for hosiery manufacture, the consumption of this variety would continue to remain strong. Hence they prefer to hold on to their stocks.

One of the reasons for the cotton market stalemate is the restricted buying of cotton by the mills whose raw material procurement is heavily dependent on the movement of yarn. This is said to be slower forcing the mills to go for limited cotton purchases to meet their immediate needs.