Despite limited demand from mills, cotton prices have increased about Rs 4,000 for a candy of 356 this week to Rs 59,000-59,500 on rise in raw cotton rates and lower supply.

Moreover, the price surge in the global market also supported the bullish trend in the domestic market.

At Rajkot, Shankar-6 cotton was quoted on Friday at Rs 59,000-59,500 a candy. The daily arrival in Gujarat is 33,000 bales (of 170 kg) and in the country 80,000 bales. With the third picking in cotton getting almost over, arrivals are down to a trickle.

Price of kapas or raw cotton, main raw material for ginning mills, increased to Rs 1,375-1,380 for a maund of 20 kg in Gujarat from Rs 1,220-1,240.

The surging price has limited demand from spinning mills, while buying of raw cotton by ginners is limited due to disparity in the price of compared with the lint or ginned cotton.

A Rajkot-based cotton broker Mr Jainbhai Patel said: “Ginners are not buying so much and are waiting for kapas price to ease a little. Similarly, millers are also waiting for price to be stable. It is not viable for them.”

Cotton futures in the global market is heading for the biggest weekly gain in three months, on signs global supplies will remain subdued amid increased demand from China, the world's biggest consumer.

While the global price trend is driving up domestic cotton prices, another major factor for boosting the price is the Cotton Advisory Board's pruning of production estimates for the current season.

On February 26, the CAB cut the production estimate five per cent to 312 lakh bales (of 170 kg each) from its earlier estimated of 329 lakh bales.

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