Cotton prices to stay subdued till January

Cotton prices are likely to remain depressed till January next year. Thereafter, exports demand is expected to boost the market sentiment, thereby lifting prices in the spot as well as the futures market.

Shirish Shah of Bhaidas Cursondas & Co, a city-based trader, said exports demand was expected to come only in January 2007.

Because of higher carryover stocks this season the domestic demand has come almost to a standstill. Most stockists had enough stocks to meet the current demand and, hence, there was no room for fresh demand from users, he said.

Besides, the current monthly arrival of 30 lakh bales in the market is much higher than the regular monthly demand of 14.5 lakh bales from mills, 1.5 lakh bales from SSIs, 1.25 lakh bales from non-mills and about 6-7 lakh bales from others.

The price scenario is expected to worsen further in the months ahead on the back of increased cotton supply. According to sources, cotton supply is expected to surge, up to 50 lakh bales in December and January. Prices of cotton across all varieties have declined up to 7 per cent so far this month in the spot market. The price of DCH 32 slumped 7 per cent to close at Rs 9,420 a tonne today from Rs 10,123 a tonne on November 1.

Similarly, Shankar 6, the benchmark variety at East India Cotton Association, slipped to Rs 5,090 a tonne from Rs 5,174 a tonne at the beginning of the month. Bangal deshi and Jayadhar varieties, too, fell today, to Rs 4,077 a tonne and Rs 4,021 a tonne from Rs 4,134 a tonne and Rs 4,330 a tonne, respectively.

"Low demand is affecting the prices only temporarily "� a surge is due. Before the next season crop hits the market to force a further drop, the prices will move up," Shah said.

After an unknown disease affected the crop in Gujarat badly, speculation over whether the state will be able to meet the production target continues.

Elaborating on how the disease affects the plant, an industry expert said, "Cotton leaves in some areas turn red over a period of time and then the plant dies."