MUMBAI (Commoditiescontrol) – After a lull of almost 3 months, yarn prices have started raising their heads to meet the impending summer season demand for cotton apparels. Prices are also strongly supported by the firming cotton prices during the cash crunch period. They have only started sobering in early February after the limits of cash withdrawal were removed from February 1.
The easing of cash crunch has also prompted farmers to bring their produce to mandis, which is resulting in softening of cotton prices. But seeing demand for yarn and their prices rising, cotton may get some support but may not trigger a big rally since nearly half of cotton crop is yet to arrive.
Meanwhile, cotton yarn prices have jumped Rs8-14 a kg early this week, depending on count spec in Coimbatore market. Prices rose sharply rising for finer count yarns, which reflect the upcoming demand for fine fabric during the summer season (April to June). Further, half the mills that were out of operation since demonetization, may resume and boost demand for cotton in coming days.
40s cotton carded warp yarns for knitting was dearer by Rs8 to Rs220 a kg while 80s weft knitting yarn gained Rs10 at Rs290 a kg. The highest gains were seen in 60s yarn which rose Rs14 at Rs248 a kg. Sources said that Indian yarn prices on China borders have risen US cents 14 a kg as against flat domestic prices. Cotton prices in China are moving at a slow pace and imports are no more competitive, as a result.
With official sales from state reserves due to resume from 6 March, spinners in China will find ample supplies at acceptable prices. Therefore, India's yarn exports to China is likely to fall with a possible drop in yarn prices at home.
Thus, prospects for export of cotton and cotton yarn to China appear bleak, but domestic market is likely to cover up this deficit while doors of Bangladesh and Vietnam are always open.
(By Commoditiescontrol Bureau; +91-22-40015522)
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