The 'bull-run' in cotton prices in the domestic markets seems to have ended and prices are now expected to fall below Rs 30,000 a bale by the end of 2022, while that on the Intercontinental Exchange December futures is expected to drop to 80 cents a pound.

Besides demand erosion, the firm US dollar outlook, global recessionary fears and a better crop outlook will lead to lower prices in the coming weeks and months, said Tarun Satsangi, AGM (Research), Origo e-Mandi.

Domestic cotton prices have lost about 18 per cent from their record highs of Rs 50,330 a bale, while they fell 18 per cent in ICE futures and 11 per cent in India last week.

Recessionary fears in the US economy have been denting sentiment in commodities. Apart from this, the lockdown in China, which accounts for 21 per cent of global imports, has further weakened prices.

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Exports fall

In the 2021-22 Crop Year, around 3.7-3.8 million bales were exported till May 2022, against 5.8 million bales exported in the year-ago period.

Higher prices have made exports economically unviable. This year, India’s cotton exports may be limited to 4-4.2 million bales, against 7.5 million bales logged in 2020-21, he said.

Cotton imports to increase

Duty-free imports can provide relief to the extent of 15-16 lakh bales till September-end. Indian traders and mills have bought 5 lakh bales of cotton after the removal of duty.

Overall, imports for 2021-22 now stand at 8 lakh bales. With the likely import of another 8 lakh bales till September-end, total imports for 2021-22 will be 1.6 million bales. Most of the imports are from the US, Brazil, Australia and the West African countries.