Lower purchase of cotton by exporters and spinning mills despite dwindling arrivals is likely to hurt its prices in the coming days.

Domestic market supply saw a decline of four per cent to 223.43 lakh bales (of 170 kg each) as on February 26, against 233.84 lakh bales that arrived for sale during the same period last year, data put out by the Cotton Corporation of India (CCI) showed.

Although supplies in February showed an increased, recovering from a 14-per cent fall until January-end, they were cumulatively lower compared with the previous year. The marketing year for the crop runs from October to September.

“Due to delayed sowing, prolonged rain and subsequent festival days, the pace of supply has been slower compared with last year. Even though the pace has picked up now, cumulatively it is still lower than the previous year,” the CCI said in a report.

The Cotton Advisory Board last month cited monsoon vagaries to revise its harvest forecast for the 2011-12 season to 345 lakh bales against initial estimates of 356 lakh bales against 325 lakh bales last year. Although the area under cotton cultivation increased by 10 per cent in 2011-12 to 12.19 million hectares, supply has been hit due to crop damage — through pests, higher temperature, fluctuations in moisture content — in key producing States, the CCI report pointed out.

Currently, daily supply is now in the range of around 1.60-1.65 lakh bales against 1.70-1.75 lakh bales witnessed during the same period last year.

On the rates front, the most popular variety — Shankar-6 — is currently ruling at Rs 33,900 a candy (of 356 kg) against Rs 36,225 during the same period a year ago. Slack export demand and restricted buying by mills (that have ramped up purchases and built up inventories some 2-3 months ago itself during the off-season) are likely to curb prices of domestic cotton in the coming days.

> gayathri.gururajan@thehindu.co.in

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