Cotton likely to head south

Cotton prices are likely to head south in the coming days as arrivals pick up momentum across the country. Currently, major markets in Gujarat, the largest cotton producer, remained closed on festival season.

Sandeep Shah, an Ahmedabad-based trader, said, "As the markets are closed for 5-7 days, there are no fresh arrivals. But once the markets open and arrivals begin, there could be a decline in cotton prices."

Before the market closed last week, the Shankar-6 variety of cotton was ruling at around Rs 20,000-20,200 a candy. "There is a possibility of a 3 per cent fall in rates in the week ahead," added Shah. This would mean a fall of around Rs 600 a candy.

Meanwhile, reports suggest the cotton prices have fallen by Rs 100 a candy (1 candy= 356 kg) in the central zone (Gujarat and Madhya Pradesh).

"This is a very insignificant price movement in cotton," said sources at the Cotton Corporation of India. Gujarat, which has the highest yield pattern in the country, is expected to contribute around 110-115 lakh bales (each of 170 kg).

According to O P Agarwal, executive director of the Cotton Association of India, markets were ruling steady and arrivals have not yet picked up. "By the end of this month, cotton arrivals will zoom and prices may soften," he said.

The country is expecting a crop of 310 lakh bales in 2007-08, up by around 15 per cent from the last year's crop size of 270 lakh bales.

Market experts said that Bt cotton had contributed to the robust production. Currently, Bt cotton covers almost more than half the area under cotton cultivation in the country. The total acreage is expected to touch around 95 lakh hectares this year.