Cotton hit by demand dip
Firm international cotton prices have provided support to the domestic market, with spot prices increasing in a month. Good weather and expectations are likely to bring down prices.
By NIDHI SHARMA, TNN |
MUMBAI : Firm international cotton prices have provided support to the domestic market, with spot prices of Shanker 6 variety increasing from Rs 18,500 per candy to Rs 20,500 levels in a month. Good weather and expectations are likely to bring down prices.
Even USDA’s (US Department of Agriculture) latest data triggered bearish sentiments, which shows that world consumption will get reduced mainly due to lower consumption by Pakistan. Despite a lower world production in 2007-08, it has been offset by a statistical adjustment in China’s production, which has been raised for four years from 2004-05 through to 2007-08.
Earlier, USDA data estimated a 28% fall in cotton acreage for 2007-08 at 11.1 million acres, leading to firm international prices. Cotton prices for the December contract at NYBOT increased 8.9% to 67.1 cents per pound from 61.6 on June 28. In local markets, prices of Kapas March, 2008 contract at NCDEX moved up from Rs 428.5 per 20 kg on June 28 to Rs 453 levels at 4:00 pm on Friday.
East India Cotton Association president KF Jhunjhunwala said: “Prices in the spot market had moved up with a firm global market and initial reports of delay in rainfall in Maharashtra. But now, with good rains and reported increase acreage in the North Zone, prices will come down,” he said.
Man Financial Commodities research analyst Prerna Desai, however, feels that with good global demand for local cotton from China and good domestic consumption, prices will not come down below a certain level. “If the weather is favourable, upside will be limited but the trend for cotton appears bullish,” said Ms Desai. With the government announcing the export package on Thursday, textile commissioner JN Singh feels exports will be between 45-50 lakh bales, with a good demand from Turkey and China. However, cotton exporter Nayan Mirani feels exports will not go beyond 42 lakh bales as many exporters cancelled orders with a firm local prices.
Meanwhile, sowing for the new crop has been completed in North Zone and there is 7-10% increase in the acreage. North Zone comprises Punjab, Haryana and Rajasthan. Sowing has started in Central Zone in Maharashtra, Gujarat and Madhya Pradesh, where there have been good rains. In South Zone (Tamil Nadu, Karnataka and Andhra Pradesh), sowing has started in Andhra Pradesh.
Even USDA’s (US Department of Agriculture) latest data triggered bearish sentiments, which shows that world consumption will get reduced mainly due to lower consumption by Pakistan. Despite a lower world production in 2007-08, it has been offset by a statistical adjustment in China’s production, which has been raised for four years from 2004-05 through to 2007-08.
Earlier, USDA data estimated a 28% fall in cotton acreage for 2007-08 at 11.1 million acres, leading to firm international prices. Cotton prices for the December contract at NYBOT increased 8.9% to 67.1 cents per pound from 61.6 on June 28. In local markets, prices of Kapas March, 2008 contract at NCDEX moved up from Rs 428.5 per 20 kg on June 28 to Rs 453 levels at 4:00 pm on Friday.
East India Cotton Association president KF Jhunjhunwala said: “Prices in the spot market had moved up with a firm global market and initial reports of delay in rainfall in Maharashtra. But now, with good rains and reported increase acreage in the North Zone, prices will come down,” he said.
Man Financial Commodities research analyst Prerna Desai, however, feels that with good global demand for local cotton from China and good domestic consumption, prices will not come down below a certain level. “If the weather is favourable, upside will be limited but the trend for cotton appears bullish,” said Ms Desai. With the government announcing the export package on Thursday, textile commissioner JN Singh feels exports will be between 45-50 lakh bales, with a good demand from Turkey and China. However, cotton exporter Nayan Mirani feels exports will not go beyond 42 lakh bales as many exporters cancelled orders with a firm local prices.
Meanwhile, sowing for the new crop has been completed in North Zone and there is 7-10% increase in the acreage. North Zone comprises Punjab, Haryana and Rajasthan. Sowing has started in Central Zone in Maharashtra, Gujarat and Madhya Pradesh, where there have been good rains. In South Zone (Tamil Nadu, Karnataka and Andhra Pradesh), sowing has started in Andhra Pradesh.
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