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Increased demand from millers and exporters has jacked up cotton prices to their highest levels in three years. The prices, according to sources, have jumped to Rs 48,500 a candy (356 kg) in recent trades.
“There is high demand from millers, mainly because of increased yarn exports. Yarn exporters are getting better prices due to an escalating dollar and increase in international prices,” said Arun Dalal, a leading trader in Ahmedabad.
A weakening rupee has benefited exporters in sending more cotton and yarn. Government estimates suggest exports are likely to be 10 million bales (170 kg each) in the 2012-13 cotton season, about a fifth of the world total of export.
Prices firmed up on commodity exchanges on Monday. NCDEX cotton for October delivery was Rs 20,000-20,500 a bale. Prices have gained by Rs 2,000 a bale since May.
“Domestic and export demand has added fuel to rising cotton prices. This is one of the highest price levels since 2011,” added Dalal.
Analysts say sustained rainfall for the past two months has damaged some crop, which could lead to further strengthening of the prices.
“Demand for cotton has gone up within India as well as abroad. China has emerged as a major buyer of yarn from India. This has left India’s cotton market hand-to-mouth,” said a Kolkata-based exporter. “Looking at the demand pressure, prices might touch Rs 50,000 a candy for a brief period. However, as the new crop starts arriving in the market, prices might cool down. But there is less likelihood of prices falling below Rs 45,000 a candy in the coming months,” he said.
Cotton export registrations during June surged 73 per cent against the same month last year, to a record 142,297 tonnes.
