Amid the prevailing credit crunch and concerns over the consumption of raw cotton in the country for the current season, there is good news for the cotton farmers that a few exporters and south India-based mills have started their fresh buying from the open market. As a result, raw cotton prices, including spot and futures, have showed some upward movement at domestic markets over the past few days. The domestic prices are almost at par with those at the New York market and there is a possibility of some export deals, sources said.
?There have been some fresh buying enquiries from Bangladesh and Indonesia as Indian prices are closed to international markets. I think we expect some export deals in the next 10-12 days,? Saurin Parekh, a leading trader said.
Spot prices of Shankar 6 (Gujarat) have gone up by Rs 100-200 to trade in the range of Rs 21,200 to Rs 21,600 per candy (1 candy=356 kgs). At the National Commodity & Derivatives Exchange Ltd (NCDEX), April 2009 contracts prices also gained some ground, contracts breached the Rs 500-mark and trades are at Rs 509 per 20 kg on Saturday, showing an increase of 5%-6% during the current month.
?There is talk that a few exporters and south India-based mills have bought about 40,000 bales last week. China and Bangladesh may buy some quantity from India soon,? Kirit Mehta, a local broker said. (1 bale=170 kilograms) Cotton prices at the New York market are currently hovering around 52-53 cents per pound, sources said.
China, the world?s biggest buyer, may import at least 25% less as the global recession erodes demand for textiles, researchers at the Chinese Academy of Agricultural Sciences said. Imports by China may total 1.5 million metric tonne in 2009. China so far purchased 1.94 million tonne till November 2008 (11 months). ?As far as domestic mills are concerned, there is forced-buying and they are purchasing cotton for their immediate requirement as they have no stocks-on-hand,? a local broker said.
Raw cotton prices may remain steady at higher levels over the next few days on export buying interest amid firm international trend, an analyst said. Daily arrivals in the country have reached to 2.4 lakh bales as on January 24. All- India arrivals as on January 24 are reported at 166 lakh bales for the current season, down from 195.40 lakh bales last season.
Cotton arrivals this season have been lagging compared to that of previous year, largely on account of lower arrivals from Gujarat, the largest cotton producing state, unfavourable weather conditions and pest infestation.
The national futures market for cotton continued to move in the downward direction in December 2008. Prices for the ongoing contracts trading on NCDEX fell 8%-10% in December.