Cotton prices are likely to fall marginally in the coming two months as millers have already bought their requirements for the current season which ends in September.
Traders told Business Standard that increased offloading by ginners to create space for the new crop will dampen prices.
"Demand from millers is missing," a Ahmedabad-based trader said and added the domestic prices may fall by around Rs 500 per candy (of 356 kg) by September. Lower global prices may also add to the fall, he stated.
Last week, mill delivery cotton, imported from Australia, was being offered at Rs 20,500 a candy, compared with about Rs 22,500 for similar Shankar variety.
"Domestic prices are likely to fall but may stay at a slightly higher level than global prices," industry sources said.
However, D K Nair, secretary general of the Indian Cotton Mills Federation said, "next season's cotton is yet to arrive in the market, therefore, it is too early to predict anything. Presently, domestic prices are already 20 per cent above the international prices."
Traders said India has so far imported about 2.5 million bales of cotton of 170 kg each in 2000-01 (October-September) and another 250,000 bales is likely in the remaining months. Last year, the country imported about two million bales of cotton.
On imports, Nair added, "if production is good, then imports will automatically come down. But, other factors like quantity and quality of the produce will play an important role."
Traders said domestic cotton prices are unlikely to rise significantly in the next season because of a good harvest forecast in 2001-02. "Crop situation is healthy due to good monsoon," an official of the state-run Cotton Corporation of India stated.
Traders have estimated cotton output at about 18 million bales in 2001-02 against nearly 14 million bales a year ago due to increased area under cultivation.
Output in Gujarat, the country's largest cotton producing state, is likely to be about 4.5 million bales compared with 2.3 million bales in the previous year.
Cotton has been sown over nearly nine million hectares in India, up from 8.3 million hectares in 2000-01.
