Export demand, reduction in arrival push up cotton prices

Cotton prices seems to have started moving upwards following sustained buying of exporters and reduction in arrivals of the commodity due to festive season of Diwali. The prices in both spot as well as forward market have surged in the range of Rs. 500 to Rs. 600 per bale in last week.

The spot prices of Sankar-6 variety of cotton today surged to Rs. 23,200 to Rs. 23,300 per bale from Rs. 23,000 to Rs. 23,100 yesterday. It may be mentioned here that the price had increased by Rs. 200 per bale on Wednesday.

"The prices of Sankar-6 have firmed up by around Rs. 500 to Rs. 600 per bale in past one week. In forward market, deals for 15 lakh bales have been struck so far," said Kishor Shah of Central Gujarat Cotton Dealers' Association (CGCDA).

Forward market has also seen increase in cotton prices. The price of forward contract for delivery in January today firmed up to Rs. 24,200 per bale from Rs. 24,000 per bale yesterday. Similarly, November and December delivery prices were quoted at Rs. 23,600 and Rs. 23,800 per bale, which were ruling at Rs. 23,400 and Rs. 23,700 per bale respectively.

"Considering upward movement in prices, Cotton Corporation of India (CCI) also raised the procurement prices by Rs. 200 per bale," said cotton traders based in Ahmedabad.

"The exporters have shown renewed interest in cotton buying, which led to rise in cotton prices during last few days. Forward deals to the tune of 16 lakh bales have been struck, mainly for export market," added Arun Dalal, owner of Arun Dalal & Co, an Ahmedabad-based cotton trading firm.

The cotton market has seen demand recently from China, Indonesia, Thailand and Bangladesh. Reduction in arrivals of cotton due to festive season of Diwali is yet another reason cited by traders for price rise. "Cotton arrivals today plunged to 45,000 bales across the country from 85,000 bales on Wednesday," he said.

The total cotton arrivals in India stood at 11 lakh bales as on October 15.