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Coton traders are benefiting from the rupee's value slide, with a surge in exports and a resulting boost to prices at home, too.
China and Bangladesh are importing; orders have also started from Pakistan, Vietnam and Thailand. "We expect exports to rise to around 10 million bales (a bale is 170 kg) this year against last year's 12 mn. The Cotton Advisory Board's initial estimate was around 8.5 mn bales. The rise is mainly driven by a weak rupee," said Rakesh Rathi, president, North India Cotton Association.
"Already large quantities have been exported. Further, registration of around 300,000 bales has been done in May. This has caused spot cotton prices to jump to around Rs 39,700 a bale," said Shirish Shah, a leading exporter and an office-bearer of the Cotton Association of India.
In the domestic market, prices has risen in the past month to Rs 41,000 a candy (356 kg), from Rs 39,500. "Traders are getting good margins; therefore, they're holding the stock in warehouses for further profits. Also, the yarn market has improved and mill demand is likely to go up," said a trader in Ahmedabad.
Added S Stalekar, vice-president, cotton division, Sagar Enterprises: "We are nearing cotton exports of around 10 mn bales (this year). This will put pressure on domestic markets, as home demand will rise in the coming months. Prices are already higher at around Rs 41,000 a bale."
