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Cotton Turns Bullish As Rainfall Delays New Crop Arrivals

28 Sep 2019 7:03 pm
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MUMBAI (Commoditiescontrol) - With the increase in arrival of new cotton in North India, cotton prices have gone up by 2-2.8 percent from their low this week. Despite the strong crop estimates and the arrival of new crops in the mandis of Haryana, Punjab and Rajasthan, the main reason for this increase is actually the rainfall.

In the investigation of Commoditiescontrol.com, it has come to light that there has been heavy rainfall in the cotton producing areas of Madhya Pradesh, Gujarat, Maharashtra and South India. In such a situation, there is a possibility of delay in arrival with crop damage.

The director general of the Meteorological Department, Mrityunjay Mohapatra, said, "At the moment there are no signs of a monsoon departure".

The Meteorological Department has issued a "Red Alert" for Gujarat even today. Apart from this, rains are also continuing in Madhya Pradesh.

In Punjab, Haryana and Rajasthan, new cotton arrivals have started from the first week of this month.

There was a huge drop in prices till three days ago, but the market has changed since Wednesday this week.

Rakesh Rathi, president of the North India Cotton Traders Association, said, "At this time good and cheap cotton is only available in North India, due to which demand is coming from neighbouring states as well".

A cotton broker from Maharashtra said, "Actually the state is lacking in good quality stock. It has stock of about 1.6 lakh bales and most of it is also with CCI. Also the quality of the crop has been affected due to the rains in the state, the arrival has also been delayed ”.

The question is whether the cotton of North India is competitive for the mills of neighbouring states?

In response, Gujarat-based cotton businessman Manoj Gala said, "The mills do not really have the stocks and the quality of stock that is available in the market is not good. The arrival of new crop here will be available only in November. So the mills will have no choice".

In South India, the arrival of new cotton will be possible only in November.

Experts believe that due to delay in arrival of new crop, MCX will not have stock availability for delivery for October futures . Because at present, there is no stock in the warehouse of the exchange. While open interest is more than 41,000 bales.

Rakesh Rathi, however, said that this situation is not sustainable as with the arrival of new crop in Gujarat and Maharashtra, the market will again be under pressure".

This year the estimated cotton crop is at around 375-390 lakh bales. Also, carry forward stock of 1.5 million bales will be available.


       
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