Increased Chinese buying pushes up cotton prices

Rising demand from China has resulted in a spurt in local cotton prices over the last two months. While 68 lakh bales of cotton have been registered for exports, 45 lakh bales have already been shipped so far.

“China bought 30 lakh bales of cotton from across the world during the January-February period, which is close to three times higher than in the same period last year,” said Kishor Shah of the Central Gujarat Cotton Dealers Association (CGC DA).

“The spot price of Shankar-6 cotton touched Rs 29,000 per candy in March. The price was Rs 26,000 per candy in January. Currently, Shankar-6 cotton is being traded at Rs 28,500 to Rs 28,600 per candy,” Shah said, adding, “The trend is similar in other varieties of cotton from other states.”

In 2008, Shankar-6 cotton prices had crossed Rs 29,000 per candy. Cotton traders feel the current situation will take cotton prices to a new high this year. The Cotton Association of India’s February estimates show a cotton crop size of 301 lakh bales in India in the current cotton year (October-September).

According to cotton traders’ estimate, cotton imports by China during January and February stood at 2.99 lakh tonnes and 2.21 lakh tonnes, respectively. Of the total imports by the neighbouring country in January, 1.72 lakh tonnes cotton was bought from India.

Although China’s cotton imports eased in February compared to January, they remained 137 per cent higher on a year-on-year basis. “Of the total amount of cotton booked for exports from India during January-February, on an average, 50 per cent was for China,” said Manubhai Shah, owner of Manubhai Mangaldas & Co, an Ahmedabad-based cotton trading firm.