The prices of Gujarat’s most popular long staple Bt cotton variety, Sankar-6, have declined due to the recent good spell of rainfall across the state, traders said on Thursday.
Sankar-6 cotton opened at Rs 27,700 a candy, down Rs 400 from Wednesday’s close.
| SOFTENING |
Traders said cotton prices may even slip to Rs 26,000 a candy (1 candy = 356 kg) within next 10-15 days because the mills are not ready to buy at higher levels.
During the 2007-08 season (Oct-Sep), Sankar-6 prices in the state had touched an all-time high of Rs 28,000-28,500 a candy, against the average price in the range of Rs 20,000-21,000.
The government measures of scrapping 10 per cent import duty on cotton and abolishing 1 per cent incentive on the exports also did not help in pulling down the prices much.
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“Recent rain spell in the state has revived the hopes of a healthy cotton acreage and the bullish sentiment is wearing off,” said Arun Dalal, an Ahmedabad-based trader.
“Prices will slip to Rs 26,000-26,500 a candy level within the next 10-15 days,” said Navin Soni, another city-based trader.
The weakness has squashed the bullish sentiment prevailing in the market, said Jatin Bhindora, a Rajkot-based trader.
Before the recent spell of rains, traders feared that the cotton sowing in Gujarat will miss the target of 2.45 million hectares this kharif (Jun-Sep) season, but they now say the target will be met easily.
“We feared that cotton area in Gujarat may come down to 2.24 million hectares this year due to insufficient rain,” said Dalal. The state’s total cotton area in 2007 was 2.52 million hectares.
Gujarat is the top cotton producing state in India, with an output of 11.5 million bales (1 bale=170 kg) out of the country’s total estimated production of 31.5 million bales in 2007-08 (Oct-Sep).
Insufficient stock
However, some traders feel the prices will get some support at the level of Rs 26,500 a candy because the stock of good quality Bt cotton is not sufficient to meet the demand.
“Sankar-6 prices will not fall beyond Rs 26,500 during this month as the stock of Sankar-6 is less than 250,000 bales (1 bale = 170 kg) and we have to last this stock until the new arrivals start in October,” said Dilip Patel, a Kadi-based cotton ginner and trader.
There will be a gradual decline in the Sankar-6 prices, and the new season may see them opening at Rs 25,000 a candy, he said. Some traders have already started selling cotton at Rs 27,000 a candy, but the prices are unlikely to fall beyond that level as the stock is less, said Bhindora.
Sowing status
The cotton sowing in the state is almost complete, with around 2.3 million hectares having already come under cotton cultivation until now, Dalal said.