Global cotton prices have shot up nearly 14 per cent to 85.5 cents per pound (Rs 30,908 per candy) in February due to tight world supplies and recovery in demand, the International Cotton Advisory Committee (ICAC) said.
“Cotton prices increased sharply in February 2010,” ICAC statement said.
Global prices, which were ruling at 75.35 cents per pound (Rs 27,238 per candy) on February 1, have risen to 85.5 cents per pound (Rs 30,908 per candy) on February 26, it said. One candy weighs 356 kg of cotton.
ICAC noted that a possible 15 per cent drop in global cotton stocks due to lower global output and rebound in demand are weighing on prices.
The ending stock of cotton is expected to be lower at 10.5 million tonnes (mt) in the current season compared to 12.33 mt in the last year, according to ICAC forecast. Cotton season runs from October to September. The world cotton output is likely be slightly lower at 22.2 mt in the 2009-10 season from 23.42 mt in the year-ago period. Global consumption is estimated to be at 24.1 mt. Taking firm cues from the world cotton market, domestic cotton prices have also shot up by 4 per cent to Rs 27,100 a candy. According to the Confederation of Indian Textile Industry (CITI), the domestic price of Shankar-6 cotton has increased to Rs 27,100 from Rs 26,000 a candy in the past one month.
Similarly, J-34 cotton variety has risen to Rs 25,300 from Rs 25,000 a candy in the review period.
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A CITI official observed, “The domestic exports may rise further if global rates remain higher for some time. India has exported 3.5 million bales during October-February of this season.” One bale contains 170 kg of cotton.
Meanwhile ICAC, which takes note of price from global Cotlook A index, said, “The daily Index could remain above 80 cents per pound (453 gm) for some time.”
At Cotlook, prices are quoted in cents per pound. When calculated in rupee terms, it would be Rs 28,920 a candy.
But the competition with polyester and the expected increase in 2010-11 cotton production could cause prices to return to lower levels during last few months of the current season, ICAC said. “Higher prices paid for 2009-10 cotton, combined with the recent decline in prices of foodgrains and oilseeds and relatively stable production costs, will encourage farmers to increase cotton plantings in 2010-11,” it added.