 "Short supply, improved demand lift up cotton prices")
During last one week cotton prices have moved up from Rs 34,500 to Rs 35,500 per candy of 355 kg. Arrival of the commodity also fell to 45,000 bales (a bale of 170 kg) as against 55,000 bales in past two weeks. As compared to last year's corresponding period, current arrivals have been almost 44 per cent lower. In May 2015, daily arrivals stood at about 80,000 bales.
"Demands from domestic mills are good and as against it, supply is tight which has mainly lifted cotton prices up in last one week. Moreover, fresh export demands are also possible to come up in the coming days. Looking at the current market scenario prices may continue to move up," said Arun Dalal, an Ahmedabad-based cotton trader.
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According to Dalal, prices may increase by Rs 1,000 per candy in May.
India has exported about 6.2 million bales of cotton so far and more 500,000-600,000 bales likely to export in coming time this year.
On the other side, quality of raw cotton or kapas has also declined as most of the good quality products have arrived in the market. Farmers are also not willing to sell raw cotton at the lower rate which has restricted the supply at this time.
Mumbai based cotton trader Shirish Shah said, "Farmers' expectation of higher prices have restricted raw cotton supply. Currently, average grade cotton arrival is more than good quality as most of the stock has been sold in this season. This has impacted cotton prices in recent times."
Raw cotton prices have increased from Rs 925-990 per 20 kg to Rs 1,000-1,035 per 20 kg in past one week.
The forecast made in February by the Cotton Advisory Board (CAB) estimated cotton output at 35.20 million bales for the season 2015-16 (October-September) as compared to 38 million bales recorded for the last year.
Data of Cotton Association of India (CAI) shows that between October 2015 and February 2016, arrival of cotton was 24.50 million bales, which stood at 27.62 million bales in the same period last year. The Association has also revised cotton production estimate to 34.5 million bales as against previous estimate of 35.50 million bales.