The Hindu Business Line : Raw cotton prices rise on slower arrivals

Raw cotton (kapas) prices across varieties have firmed up this week amidst constraints in arrivals of kapas in key markets. The price increase ranged between Rs 200 and Rs 500 per candy (356 kg) and among the varieties that saw spurting are long-staple DCH-32, V-797, J-34 from Punjab, Jayadhar, MCU-5, MECH-1/H-4 and Bengal Deshi.

Arrivals of kapas (raw cotton) turned scarce this week as anxious spinners, hamstrung with minimum cotton stocks, went into buying mode. This is believed to have stoked the price surge, according to market sources.

The slower arrivals is attributed to farmers/ginners holding on to their stocks in anticipation of higher demand in the coming weeks.

Daily arrivals of cotton have dropped to 80,000 bales (of 170 kg each) from December last week/January first week’s levels of two lakh bales a day.

Lint output may fall

According to Mr Ashok Daga, President of Coimbatore Cotton Association, part of the price increase is on account of a lower ratio of lint to cottonseed recorded this year. As compared to the normal lint realisation at 35 per cent against seed weight of 65 per cent, this year the Bt cotton yields have revealed a higher cottonseed weight that has gone up to 67 per cent bringing down the yield of lint.

This factor, according to Mr Daga, is expected to bring down the overall lint production this season from the projected 310 lakh bales to around 290 lakh bales. This ratio difference has led to lint prices increasing by Rs 700 per candy.

According to Mr Ramani, Joint Secretary, South India Cotton Association, though the international cotton prices have dropped by Rs 1,000 per candy this week, domestic cotton prices continue to remain firm partly on account of the higher holding capacity of cotton farmers who are reluctant to part with their kapas at the prevailing prices.

These farmers, having already sold 50 per cent of their produce at a seller’s market, now prefer to wait for the market to go up before they offload their remaining stocks. The higher kapas yield recorded by farmers especially in Punjab and Gujarat this season has enabled cotton growers in these tracts to hold back their stocks. Sizeable volume of cotton exported also gave the pep to the domestic raw cotton market in keeping prices firm.