5-8% local rise trims gap with global cotton prices

With the current rise of 5-8 per cent across all categories in the domestic cotton prices in less than one month, disparity between the local and the gloabl cotton prices is narrowing down slightly.

Cotton prices trend in the international market is upbeat on the back of crop losses reported in Egypt. Prices of Egyptian cotton "" a high-demand extra long cotton in the world "" have gone up about 25-30 per cent in the last one month, as experts believe that cotton production in Egypt will be on the lower side this year.

J34 cotton is currently quoted at Rs 4,274 per quintal vis-a-vis Rs 4,134 per quintal on November 21, while Y1, MCU5 and 26MM cotton are quoted at Rs 4,274 per tonne, Rs 5,793 per tonne and Rs 4,499 per tonne, respectively.

Prices of extra long stapple cotton "" DCS 32A and 32B "" shot up to Rs 10,967 per quintal and Rs 9,139 per quintal from Rs 10,124 per quintal and Rs 8,718 per quintal, respectively, in the comparable period.

"India depends solely on imports of extra long staple cotton. Therefore, any changes in the international cotton scenario will have impact on the domestic cotton prices as well," said KF Jhunjhunwala, president, East India Cotton Association.

"Exports business has so far been lower this year, and the scenario is going to remain the same throughout the year, as common and long staple cotton production the world over is normal," Junjhunwala said.

Cotton supply for the current year entered into a 75,000-80,000 bales range on November 5 this year. Supply has now gone up to 1,25,000 bales and is expected to go further up, to 1,50,000 bales shortly.

This year, cotton production is estimated at around 2,50,000 bales against 2,43,000 lakh bales last year, but consumption is expected to remain at the last year's level of 1,94,000 bales.

"Prices were moving around the MSP (minimum support price) and as such a further decline was impossible. So, the current price rise is a change in direction and looks like a temporary phenomenon, which will be overcome by December 15," Jhunjhunwala added.