Raw cotton spot prices in the domestic market are likely to come down from the current higher levels on lower consumption, stray export demand from China and steady inflows.
Raw cotton spot prices at the major trading centres have risen consistently during the current season 2007-08 mainly on sustained buying from exporters, millers and ginners.
“I think major portion of new crop arrivals have been cornered by ginners, stockists and exporters. Export demand is slow and buying from China is not picking up. Domestic off-take is low. Buying from southern mills is almost negligible,” a leading cotton trader said.
Prices of select cotton varieties rose by nearly 12-14% since the beginning of the season. Prices have risen to this extent in the current season when the country is expecting the record crop of 310 lakh bales for the current season, a local dealer said.
About 265 lakh bales (170 kg each) of the total crop have so far been arrived into the domestic market, which exceeded the last year’s level. Daily inflows of raw cotton into various mandies across the country have reached to around 1.60-1.75 lakh bales.
Domestic consumption is expected to come down from earlier estimated 230-240 lakh to 180 lakh bales for the current season mainly due to lower off-take of yarn and clothes.
“Domestic prices are moving in tandem with international price. New York cotton is hovering around 80-81 cents. I think market is unlikely to sustain at this level. We expect price to come to 75 cents level in the next few days. Hence, domestic prices should also come down in the days to come,” an official with leading export house said. According to market information, about 55 lakh bales of cotton have been exported so far.