DELHI (Commoditiescontrol) - Bullish trend in cotton prices is likely to continue in near term as existing stocks of cotton are low and sowing area has also declined in the current season, hence, fundamentals are supportive for positive price outlook, said Rakesh Rathi, President, Indian Cotton Association Ltd. Commoditiescontrol sought his observations on the various issues related to cotton market, hereunder is his response.
Commoditiescontrol: What direction do you find in cotton market amid reportedly low stocks and delayed monsoon?
Rathi: No doubt, present stocks of cotton are too low, that is why, there is least possibility of much bearish tone in cotton prices till Nov 15. Apart from this delayed monsoon will also support prices.
Commoditiescontrol: How much stock of cotton do you estimate at present also enough to meet the demand until new crops arrives in the market?
Rathi: In my estimate, around 40-42 lakh bales of cotton should in the country in current month of June. As far as mills requirement is concerned, present stocks will fall short of mills demand till arrival of new crop.
Commoditiescontrol: Cotton sowing is lagging this year as the farmers incur losses in cotton cultivation last year. What is your observation about sowing coverage?
Rathi: Really, cotton growers suffered heavy losses last year and that is the reason cotton acreage is expected to fall nearly 30-35 percent in Punjab and 10 percent in Rajasthan and Haryana. In fact, farmers have shifted from cotton to other crops like pulses and paddy.
Commoditiescontrol: Cotton price rally has weakened the possibility of exports, rather, talks of imports are in the air. What is real situation of exports and how much is estimated to export as of now?
Rathi: Certainly, recent rally in cotton prices in the domestic market has discouraged exports and it appears negligible presently. Imported cotton is less costlier that is why cotton is imported from Australia, US and West African countries. Only 62-64 lakh bales of cotton have been exported so far from India.
Commoditiescontrol: What impact do you find on margin of the mills in case of hikes in cotton prices and what trend is expected in yarn and textile market?
Rathi: Yarn prices have not risen that much as prices of cotton have rallied currently, hence, spinning mills are getting less margin. Since, global market of yarn and textile is facing slowdown; there is least chance of any bullish trend currently. India’s yarn export has also fallen due to increased supply of cotton in China as cotton is cheaper in China as compared to India.
As a result, demand for finished products, yarn and fabric has declined from China.
(By Commoditiescontrol Bureau; +91-22-40015533)
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