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Cotton Rallies Further In Central, South India

13 Jan 2020 2:04 pm
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MUMBAI (Commoditiescontrol) - Cotton prices gained sharply at major markets in Central and South India on Monday due to strong demand from mills and exporters amid an uptrend in the global market.

According to traders, apart from the CCI's buying, buying mills and exporters are also purchasing strongly as exports from India have gained momentum in the wake of the ongoing rally in overseas markets, prompting Asian buyers such as China, Bangladesh and Vietnam to raise Indian purchases.

Traders also argue that ban on refined palm oil import has led to a sharp rise in cotton seed oil prices in Gujarat with the latter is now hovering around Rs 1,500/tin. Oil mills believe that after the ban on refined palm oil imports, demand for cotton seed oil could rise by about 10 percent this year. It is believed that due to this, the demand for cotton has increased in Gujarat.

Meanwhile, cotton ginners in North Maharashtra are in talks with cotton importers from Bangladesh to export the produce directly to the neighbouring country.

Currently, cotton ginners in North Maharashtra are exporting cotton to Bangladesh via Mumbai-based export houses.

The Bangladesh Cotton Association has shown interest in directly buying cotton bale from ginners in North Maharashtra and has invited office-bearers of Khandesh Ginners/Pressing Factory Owners’ Association for a meeting in Bangladesh next month.

India has shipped 1 million cotton bales since the 2019/20 marketing year started on Oct 1 and another 700,000 bales have been contracted for shipment in January and February. Until few weeks ago, Indian traders had been struggling to sign export contracts as local prices exceeded global prices after New Delhi raised the minimum buying price to support farmers.

Arrivals today stood at 52,000 bales in Gujarat, 60,000 bales in Maharashtra, 14,000 bales in Madhya Pradesh, 49,000 bales in Andhra Pradesh & Telangana and 13,000 bales in Karnataka.

Globally, US cotton futures rose on Friday, supported by optimism surrounding around the US-China trade deal, while a reduction in US and world production and ending stocks estimates in the latest monthly supply and demand report added to the upbeat sentiment.

The most active cotton contract on ICE Futures US, the front-month March contract, was up 62 points to settle at 71.31 cents per lb. Earlier in the session, prices rose to their highest since May 10 at 71.39 cents. In December, the price of cotton has increased about 10 percent in the global market, while from the low of August it has jumped about 25 percent.

In its latest January report, the US Department of Agriculture (USDA) has scaled down its forecast for global cotton production in 2019/20 to 120.48 million bales (1 US bale = 218kg), compared to 121.11 million bales projected in December.

The global 2019/20 cotton forecasts also include lower trade, and ending stocks.

Global 2019/20 ending stocks are eatimated 730,000 bales lower this month. At 79.6 million bales, total ending stocks are projected about unchanged from 2018/19, but stocks outside of China are expected 3 million bales above the year before.

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