Agri Business

Cotton stock at MCX warehouse hit a new high on export demand

Suresh P Iyengar Mumbai | Updated on March 08, 2021

Cotton stock in MCX accredited warehouse has touched a new high of 2,16,600 bales as on March 5 against previous high of 2,14,700 bales logged on March 30, 2019. The rising stock at warehouse was on the back of increasing hedging activities as the export demand, especially from China, has hit a new high. China has a low inventory.

Cotton prices have gained over 10 per cent so far this year following the firm trend in the global cotton trade. Cotton production globally is projected to touch a four-year low and imports by China are estimated higher. The Centre’s decision to impose a ten per cent duty on imported cotton is seen as supporting domestic price.

Ajay Kumar, Director, Kedia Commodities, said the demand for cotton from yarn exporters has been strong as the cotton prices are low in India compared to global markets has made Indian exporters competitive in overseas market.

Chinese export

The most active March contract on MCX gained by ₹80 to ₹22,230 a bale while the April and May contracts traded firm at ₹22,560 and ₹22,860.

“We have bagged a major order for yarn export to China and used the MCX platform to lock in cotton prices as the domestic prices have been rallying steadily in last few months and have the potential to wipe out margins,” said Sanjay Agarwal, CEO of Sai Enterprises.

Arrival of the new crop in the market was about 250 lakh bales as of January-end from the season’s start in October. The Cotton Corporation of India and other government procuring agencies have about 170 lakh bales of cotton as of January-end. The Cotton Association of India has estimated cotton supply at 380 lakh bales including the carry forward stock of 120 lakh bales and imports of six lakh bales. Overall demand is pegged to increase to 330 lakh bales against 25 million bales logged previous year due to pandemic impact.

Published on March 08, 2021

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