Cotton prices hit the roof in Gujarat

The bull run in cotton prices continues unabated. The long-staple Bt cotton variety, Sankar-6, a benchmark variety for fixing cotton prices, has surged to a record high of Rs 25,500 per candy in the spot market of the state.

The forward prices for December delivery were at Rs 25,500-26,000 per candy on Monday.

 

"We have never seen such levels," said Arun Dalal, owner of Arun Dalal and Co, a leading cotton trading firm in Ahmedabad.

Market players largely attribute this surge to buoyant demand.

"China has continued to buy cotton from India, especially Gujarat," said Hemal Shah, a city-based cotton trader of Manubhai Mangaldas & Co.

"Also, domestic mills had less feedstock as many of them waited for prices to cool down. However, prices did not come down and now domestic companies have increased buying," Shah added.

"Recently, polyester prices have increased following firm crude oil prices in the international market. Yarn prices have firmed up due to depreciation in the value of rupee. This helped the prices to improve by Rs 1,000 per candy in the last one week," Arun Dalal said.

According to International Cotton Advisory Committee, global cotton production is likely to decline from 26.21 million tonnes in 2007-08 to 25.9 million tonnes in 2008-09 (October-September). While consumption is estimated at 26.70 million tonnes in 2008-09.

According to the latest estimates of Cotton Advisory Board (CAB), export from India is likely to go up to 8.5 million bales in 2007-08 (October-September) from 5.8 million bales in 2006-07. As of May, cotton exports from the country stood at 7 million bales.