Cotton prices slip in Aug on higher production forecast
Forecast of higher production during the 2007-2008 season in India and China have contributed to the softening of prices.
By PTI |
MUMBAI: Cotton prices have fallen considerably in the month of August after a rally in June-July.
Forecast of higher production during the 2007-2008 season in India and China have contributed to the softening of prices, the National Commodity and Derivatives Exchange Ltd (NCDEX) said in its cotton report here.
In India, the increased use of Bt Cotton by farmers has resulted in higher crop volumes and quality. Favourable weather conditions have also contributed to the output. In the north zone, cotton production is estimated to be at 5,197,000 (170-kilogram) bales, about 20,000 bales more than estimated.
The area under cultivation has increased by seven per cent in Punjab and by 25 per cent in Rajasthan, the NCDEX report said.
In other cotton growing states like Gujarat, Maharashtra and Madhya Pradesh, area under cotton cultivation has reportedly increased by 5-8 per cent.
India's cotton production for 2007-08 has been estimated at 30 million bales up from 28 million bales in the previous year.
Maharashtra is anticipating a cotton output of 388-lakh quintals up from 325 lakh quintals in the previous year. The government's cotton purchase bill too is expected to rise to Rs 1,000 crore this year from Rs 645 crore in the previous year.
Demand during the period has been weak with exporters and millers awaiting new arrivals, it said.
However, with a booming domestic economy and growing retail exposure, textile production has been on the rise, thereby increasing demand for cotton.
The Cotlook, an index representing the offering price of raw cotton in the international raw cotton market, has also shown a considerably declining trend in August after the rally in the previous month.
In the international market, the prevailing hot weather in China has resulted in early picking. However, growers have been holding out for higher prices. China's cotton import volume has increased since June-July, after having sharply declined since late 2006.
The domestic price of cotton and the average import price of cotton, for January to April, has been comparable and as a result forced Chinese mills to use domestic cotton instead of imported cotton.
However, since June, domestic cotton prices were at a premium to international prices, which resulted in increased imports. Meanwhile, in the US, record heat and a lack of rainfall is believed to have adversely affected the southeastern crops during the month of August, the NCDEX report added.
Forecast of higher production during the 2007-2008 season in India and China have contributed to the softening of prices, the National Commodity and Derivatives Exchange Ltd (NCDEX) said in its cotton report here.
In India, the increased use of Bt Cotton by farmers has resulted in higher crop volumes and quality. Favourable weather conditions have also contributed to the output. In the north zone, cotton production is estimated to be at 5,197,000 (170-kilogram) bales, about 20,000 bales more than estimated.
The area under cultivation has increased by seven per cent in Punjab and by 25 per cent in Rajasthan, the NCDEX report said.
In other cotton growing states like Gujarat, Maharashtra and Madhya Pradesh, area under cotton cultivation has reportedly increased by 5-8 per cent.
India's cotton production for 2007-08 has been estimated at 30 million bales up from 28 million bales in the previous year.
ADVERTISEMENT
Maharashtra is anticipating a cotton output of 388-lakh quintals up from 325 lakh quintals in the previous year. The government's cotton purchase bill too is expected to rise to Rs 1,000 crore this year from Rs 645 crore in the previous year.
Demand during the period has been weak with exporters and millers awaiting new arrivals, it said.
However, with a booming domestic economy and growing retail exposure, textile production has been on the rise, thereby increasing demand for cotton.
The Cotlook, an index representing the offering price of raw cotton in the international raw cotton market, has also shown a considerably declining trend in August after the rally in the previous month.
ADVERTISEMENT
In the international market, the prevailing hot weather in China has resulted in early picking. However, growers have been holding out for higher prices. China's cotton import volume has increased since June-July, after having sharply declined since late 2006.
The domestic price of cotton and the average import price of cotton, for January to April, has been comparable and as a result forced Chinese mills to use domestic cotton instead of imported cotton.
ADVERTISEMENT
However, since June, domestic cotton prices were at a premium to international prices, which resulted in increased imports. Meanwhile, in the US, record heat and a lack of rainfall is believed to have adversely affected the southeastern crops during the month of August, the NCDEX report added.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
