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Cotton futures in India, the world's second-largest grower, are expected to rise this week as rains could hamper harvesting and delay supplies from the new season crop while depleting stocks may aid the upside.
Fresh produce of cotton typically starts arriving in local markets from September-end or October but rains during harvesting could cause delays and increase the moisture content in the crop.
"Rains during the harvesting period could push back supplies from the new crop. Already there is shortage of the old stocks," said Arun Kumar Dalal, a trader from Ahmedabad, Gujarat.
Rains have occurred at many places in the state of Gujarat, the top producer, and are expected to continue for the next 2-3 days, India Meteorological Department said on its website.
Dalal expects cotton prices to rise to 1,000-1,500 rupees per candy in the near term because of supply shortage.
However, in the long term, the trend looks weak due to estimates of a record output in India as ample rains are seen improving yields.
The government on Tuesday estimated cotton output in 2013ô14 at a record high 35.3 million bales as against 34 million bales a year ago.
Traders' associations and spot traders have forecast cotton output in the range of 37 million to 38 million bales of 170 kg each in 2013/14.
Some marginal supplies from the new season crop have started coming into the market but arrivals would gather pace only in October.
The November cotton contract ended 0.40 percent higher at 20,170 rupees per bale on the Multi Commodity Exchange.Traders expect cotton prices to start softening once arrivals from the new crop gain pace.
In New York, the December cotton contract on the Intercontinental Exchange was up 0.49 percent at 84.68 cents per lb at 1254 GMT.
U.S. farmers are forecast to grow their smallest cotton crop in four years, as many have opted for more lucrative grains crops and as unfavourable weather has damaged yields.
