With farmers holding crop, cotton prices may remain firm

Higher estimates of consumption and tight supply is likely to keep prices firm for the next few weeks, even as farmers continue to hold close to 40 per cent of the total crop of 341 lakh bales (of 170 kg each).

Raw cotton (kapas) prices have remained firm in the range of ₹5,900-6,100 a quintal over the past few weeks due to lower-than-expected arrivals of crop and higher estimates of consumption.

According to sources, so far about 208-210 lakh bales or about 61 per cent of total crop has arrived.

Whereas on consumption front, the Cotton Association of India (CAI) has estimated for the ongoing year (October to September 2016-17), at 295 lakh bales, which is about 5 lakh bales higher than last year's 290 lakh bales.

“Prices are likely to remain firm in near future as demand from yarn makers, millers, and export is likely to be higher this year. And we feel farmers are holdingcotton stock in huge quantities.

So far about 210 lakh bales have arrived across India.

This means more than half of the crop has arrived, so there is less room for prices to soften in near future,” said Arun Dalal, a leading trader from Ahmedabad. Gujarat Sankar-6 cotton candy (each of 356 kg) hovers around peak levels of around ₹42,600-43,300 for various varieties.

At Kadi market in North Gujarat, arrivals reported at 15,000 bales on Monday with prices in the range of ₹4,500-6055.

Cotton farmer from Kadi noted, "If we are getting better price by waiting for a few weeks, then there is no harm. There is no need for us to do distress selling now as prices are good. We are bringing smaller quantity to the mandis so that the price benefit remains."

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