The prices of Gujarat Sankar-6 (GS-6) medium staple Bt cotton, the largest exported variety from India, shot up over Rs 1,000 per candy (1 candy = 356 kg) since Saturday in the spot markets in Gujarat. The increase was mainly propelled by Chinese demand and mill buying, industry officials and traders said on Tuesday.
On Saturday, the GS-6 (29mm) closed at Rs 25,100-25,200 per candy. On Tuesday, it was quoted at Rs 26,200-26,300 per candy.
“This rise was expected in the first week of December. However, increased buying from exporters and millers in the last two-three days has resulted into the sudden rise,” said Dilip Patel, President, All Gujarat Cotton Ginners’ Association.
Patel said exporters were buying, as there was rising demand from Chinese importers. “Cotton prices in China have shot up in the last few days because of good demand from millers, due to which cotton imports from India has become very affordable for them. Currently, they are buying all that they can,” said Patel.
He said domestic millers too were buying aggressively as they feared that the spurt in Chinese buying would result into further price rise.
“South Indian millers, who were buying small quantities just to meet their requirements, have now started buying large quantities to build up their inventories,” said Navin Soni, a city-based trader. He said hoarding by farmers was also pushing up the prices of ginned cotton.
If Gujarat’s cotton crop for this year (October-September) is estimated at 10 million bales (1 bale = 170 kg), then the daily arrivals should have been over 80,000 bales by now, but arrivals were steady at 50,000 bales for the past one month, Soni said.
The association has pegged Gujarat’s cotton crop at 10.0-10.5 million bales in the crop year that began in October, up from 9.2 million bales a year ago. Gujarat is the country’s top cotton growing state, followed by Maharashtra, and Andhra Pradesh.
The state government estimates the output at 9 million bales this year, up from 8 million bales in the previous year.
“Cotton prices are likely to stabilise at Rs 26,200-26,500 a candy for a few days now. However, if millers continue buying aggressively, then prices will surely touch all-time high of Rs 28,000 per candy within the next one or two months,” said Jatin Bhindora, a Rajkot-based trader.
In June 2008, GS-6 prices in Gujarat had soared to an all-time high of Rs 27,500 a candy due to short supply.
