Cotton seen steady-to-weak on new season harvest

MUMBAI: Cotton futures in India, the world's second-largest producer, are expected to trade steady-to-lower this week on supplies from the new season harvest and estimates of record crop amid slow demand for exports, though some buying from mills at lower levels is seen supporting prices.

Daily supplies have increased to 160,000-170,000 bales (of 170 kg each) from about 140,000-150,000 bales in the previous week, spot traders said. Supplies would gain further in the following weeks, they said.

"In the short term prices may remain steady because of some demand from mills and also as farmers are bringing less due to the elections. But prices tend to fall gradually on higher production," said Arun Kumar Dalal, a trader from Ahmedabad, Gujarat.

The state-run Cotton Advisory Board estimated India's cotton output at a record 37.5 million bales in the year, nearly 3 per cent more than last year, despite planting on a smaller area and heavy rains in the top three producing states during harvesting.

The Cotton Association of India revised downward its production estimate for the 2013/14 crop to 38.05 million bales from earlier 38.1 million bales, a statement from the association showed.

"The imports (by China) will not be completely banned as very expensive raw material would push local textile industry in crisis. As a result, exports to China will take place but at much lesser extent," Kotak Commodities said in its quarterly report published last week.

China, the world's top cotton buyer, has imported 3.37 million tonnes of the fibre in the first 10 months of this year, a drop of 21.7 per cent on the same period last year, the association said, citing customs figures.

Imports have declined this year after textile mills ran out of import quotas and turned to importing yarn instead of the cotton raw material.

The November cotton contract ended unchanged at 18,690 rupees per bale on the Multi Commodity Exchange. The contract has fallen more than 14 per cent since the close on Aug. 28.

The most-active March cotton contract on ICE Futures US slipped 0.04 per cent to 78.17 cents a lb at 1222 GMT.