Arrival of new cotton crop has started in Gujarat and Punjab, which are daily receiving 2,000 bales and 3,000 bales respectively. However, the prices of this new cotton is lower than the last year due to poor quality of the produce.
Marketmen are of the view that the prices will firm up as the quality cotton starts arriving in the market.
Average price of cotton in Gujarat is currently quoted at Rs. 430 to Rs. 537 per 20 kg and in Gujarat, while in Punjab it is about Rs. 450 to Rs 525. Last year the price stood at Rs. 570 to Rs. 600 at the onset of the season.
According to traders and brokers in Saurashtra, the quality of cotton arriving in the market at the begning of the season tends to be lower as farmers offload only those stocks which are harvested in pre-monsoon period. At present, there is not much demand in the market but it will improve after Diwali. The demand will be driven mainly by exporters.
Cotton arrivals have started at various locations, which include Rajkot (arrival of 800 quintal cotton), Jasdan (160 quintal), Botad (360 quintals), Amreli (3000 quintal), Savarkundala (1,100 quintals), Halvad ( 2,400 quintal). Forward contract for October is being quoted at Rs. 22,100 to Rs. 22,200 per bale, November Rs. 22,700 to Rs. 22,800 per bale and December – January Rs. 23,000 to Rs. 23,100 per bale.
Market players estimate that exports of cotton may double to 65 lakh bales from around 32 lakh bales in this year. As per Cotton Association of India (CAI) India's cotton output may total 3.12 crore bales in 2009-10, 6.7 per cent more than the 2.93 crore bales in 2008-09. Cotton acreage has reached a record 1 crore hectares.