Cotton price could tend to gain as ginners look to hold back their stocks, anticipating higher demand.
They are looking to demand from domestic mills in view of a rise in yarn exports.
The other reason for them to hold back is the poor response to Cotton Corporation of India’s sale of stocks from its inventory. Of the 25,000 bales on offer from the corporation, there has been demand for just 1,000 bales.
On Monday, cotton gained marginally on the back of good demand from mills and short arrivals.
However, weak export demand capped the rise.
Gujarat Sankar-6 cotton traded higher by Rs 100 at Rs 37,200-37,500 a candy of 356 kg. Kapas or raw cotton increased by Rs 5 to Rs 910-955 for a maund of 20 kg and Kadi delivery cotton traded at Rs 960-990.
About 20,000-22,000 bales of cotton arrived in Gujarat on Monday and 60,000-62,000 bales arrived across the country. Cotton ready delivery quoted at Rs 4,000-4,090 a quintal in Punjab, Rs 3,955-3,970 in Haryana and Rs 3,955-3,970 in Rajasthan.
A Rajkot-based cotton broker said: “Demand reported to be normal but ginners were reluctant to sell at prevailing prices due to limited arrivals.”
Cotton prices in India are expected to rise this week on short-covering after recent falls in prices, while thin release by CCI is also seen supporting prices. “Cotton prices may recover this week. Sales from CCI was very thin and below expectation because they had kept prices higher than the market rate," said Arun Dalal, a trader from Ahmedabad. On Monday, the May cotton futures ended 1.32 per cent higher at Rs 18,430 for a bale of 170 kg each on the Multi Commodity Exchange.
It has fallen more than six per cent since the beginning of the month. Cotton production is estimated to be 34 million bales in the current crop year. Some analysts expect selling pressure to mount at higher prices due to weak exports and forecast of normal monsoon. In New York, the most active July contract on the Intercontinental Exchange was up 1.59 per cent at 85.59 cents a lb at 12.47 GMT.