Cotton prices surge by Rs 100-300 per quintal

Despite the Diwali holidays, cotton prices have surged by Rs 100-Rs 300 per quintal in Mumbai mainly because of rising demand in the international market.

Price of V797 has risen to Rs 3,374 per quintal today compared with Rs 3,290 per quintal on Monday. Jayadhar shot up to Rs 3,459 per quintal today versus Rs 3,431 per quintal on Monday, while Bunny surged to Rs 5,146 per quintal today from Rs 5,118 per quintal on Monday.

"Cotton traders have already signed export orders of about 10 lakh bales to various countries including the Middle East, and orders are still coming in. The total exports this year may rise up to 25 lakh bales as the demand for Indian cotton has gone up in European and the Middle East markets," said K F Jhunjhunwala, president, East India Cotton Association.

Before Diwali, the total supply hovered around 65,000-70,000 bales, which is expected to go up to around 1 lakh bales in the next week and 1.5 lakh bales in the week starting November 14.

"Generally, cotton supply starts flooding the markets before Diwali. But due to rains in south India, the supply is expected to increase only in the second half of the current month," Jhunjhunwala said.

"Harvesting has already started in cotton growing states like Punjab, Haryana, Rajasthan, Gujarat, Maharashtra etc where the crop is satisfactory," he said.

"Hence, once the cotton supply peaks up, the price would stabilise below the current level," Jhunjhunwala said, adding that possibly the prices may not decline below the current level this year.