Downside in cotton mart

COMMODITY SPIKES

A subdued trend prevailed in the cotton market throughout the last week on poor demand from local mills and a decline in the international prices.

Prices of the most familiar varieties, including J34, NHH, H4, Shankar 6 and MCU 5, declined by 1 per cent last week, while the other categories such as Bengal Desi, V797, Jaydhar, Y1, DCH and M26 remained unchanged as nominal-to-nil trading was recorded.

Shankar 6, the most traded cotton variety, slumped to Rs 5,062 from Rs 5,118 a quintal, while J34, NHH, H4 and MCU5 declined marginally to Rs 4,809, Rs 5,033, Rs 4,977 and Rs 5,596 from Rs 4,837, Rs 5,090, Rs 5,005 and Rs 5,652 a quintal, respectively. The current downside is attributed to the release of extra stocks and a drop in exports due to an appreciating rupee.

"Of late, 10 per cent rupee appreciation and declining prices in the global market make cotton exports not very remunerative. Hence, cotton traders and growers have no option but to offload stocks in the domestic market for continued rotation of business. Holding stocks is more dangerous than selling at a lower price," said a local trader.

Meanwhile, the country's exports may touch 50 lakh bales (1 bale = 170 kg) this year, up 6.38 per cent compared with the previous year's figure of 47 lakh bales. It has already exported around 20 lakh bales to China.

Around 8 lakh bales each have also been exported to Pakistan and Bangladesh. The Indian cotton is also shipped to Indonesia, Vietnam and Thailand.