Agri Business

Cotton prices soar on supply, demand mismatch and global cues

M. R. Subramani Chennai | Updated on February 08, 2011

Cotton prices sky-rocketed on supply-demand mismatch in the spot market and a rising trend in the global market. (File photo): P.V. Sivakumar   -  The Hindu

Cotton prices sky-rocketed on Tuesday, on supply-demand mismatch in the spot market and a rising trend in the global market.

Prices for Shankar-6 in Gujarat increased to Rs 56,000 a candy (of 356 kg), from around Rs 52,000 on Monday. At the Rajkot Agricultural Produce Marketing Committee (APMC) yard, the modal price or the rate at which most trades took place increased to Rs 6,500 a quintal, from Rs 5,575 on Monday. Quality cotton fetched as high as Rs 6,610. At Rajula APMC in Gujarat, the modal price for the fine variety increased to Rs 6,575 against Rs 5,775 on Monday. Arrivals at Rajkot APMC were 500 tonnes (750 tonnes) and at Rajula, it was 380 tonnes (750 tonnes). In Madhya Pradesh, raw cotton modal prices at Ratlam APMC yard for DCH-32 increased to Rs 7,605 against Rs 7,210, despite higher arrivals of 15.53 tonnes (11.3 tonnes).

In Khammam, Andhra Pradesh, higher arrivals kept prices steady at Rs 5,300.

“No spot delivery is being offered for February and March. Forward deliveries are being offered for April and May. Moreover, the market seems to be under some frenzy over the review on export cap that will be held after February 10. We don't see any fundamental reasons for such a spike on Tuesday,” said Mr A. Ramani, an analyst.

The Union Commerce Secretary, Dr Rahul Khullar, had said a few days ago, that the Centre would review cotton export cap after February 10. The Textile Ministry is against raising the cap on the grounds that cotton production is lower than the 329 lakh bales (170 kg) estimated by the Cotton Advisory Board (CAB). But the Agriculture Ministry wants an additional 15 lakh bales to be allowed for exports, going by CAB estimates.

Global prices have gained momentum after dropping during the weekend. The price rally has resumed on fears that the supply will not be able to meet demand, especially from China.

Other rates: H-4 Mech1 Rs 55,000-56,000 a candy; Bunny Brahamma Rs 56,500-57,000; MCU - 5 / Surabhi Rs 58,000-58,500; DCH - 32 Rs 81,000.

Published on February 08, 2011

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