Cotton prices fall amid weak demand, increased supply

Prices down by Rs 800-1,000 per candy of 356 kg, fall likely to continue during festive period

Falling domestic demand from mills coupled with increase in supply in form of new arrivals has pulled down cotton prices by Rs 800-1,000 per candy of 356 kg. What's more, the prices are likely to continue to fall during the festive period in November due to subdued demand.

After fall in prices in different states, the commodity is ruling at Rs 32,200-32,400 per candy in Gujarat and at Rs 32,500-32,600 per candy in states like Punjab, Haryana and Rajasthan. On the other hand, in states of Madhya Pradesh, Maharashtra and Andhra Pradesh, cotton prices are being quoted at Rs 32,300-32,500 per candy.

"Supply of cotton has increased due to new crop arrivals. However, since it is the beginning of the season, quality of cotton is not so good. This has led to subdued demand from yarn mills and export demand is also very marginal leading to fall in cotton prices by Rs 1,000 per candy," said Arvind Raichura, owner of Balakrishna Ginning and Pressing from Rajkot.

Arrival of new crop has doubled during the month of October, resulting in supply of cotton reaching at over 125,000 bales of 170 kg per day in India as against a,consumption of about 80,000 bales. Among the states, cotton arrival stood at 35,000 bales in Gujarat, 30000 bales in Maharashtra, 20000 bales in southern states and 15,000 bales each in Punjab and Rajasthan. According to market sources, daily arrival of cotton is expected to reach upto over 200,000 bales by end of November.

"Cotton prices are facing seasonal pressure as of now. Apparently, prices of cotton seed have also declined drastically during October which has also affected cotton prices. However, cotton prices are not likely to fall below Rs 31,500 per candy," said Arun Dalal, leading cotton trader from Ahmedabad.

According to Dalal, cotton seed prices did firm up on the back of high demand in the beginning of October. However, later on, the same fell from Rs 500-510 per 20 kg in early October to now Rs 420-425 per 20 kg by end of the month.

"Fresh demand from mills and exporters may rise up after Diwali or in December due to availability of quality cotton and stable prices," said Raichura.

Meanwhile, traders said that with festive season during early November, a real movement in demand and its impact on prices could only be seen from December onwards. According to Arun Dalal, this could result in prices firming up again after mid December.