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Wednesday, Mar 16, 2005

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Buying interest likely to keep cotton firm

Dhimant Bhatt

Inflows have already touched 195 lakh bales, while four lakh bales have been contracted for exports.

Mumbai , March 15

DOMESTIC cotton prices are expected to rule firm in the short term on continued buying interest from spinning mills as well as exporters against reduced supply, traders said.

Prices of select cotton varieties such as Sankar-6, J-34, V-797 and LRA have gone up around Rs 600-800 per candy (356 kg) in past one month.

"Fresh demand from cotton mills will continue till mid-April as they are looking for quality cotton to meet their immediate requirement and to create some inventories," a local cotton merchant said.

Daily inflows of raw cotton have fallen to an average of 60,000-65,000 bales (170 kg each) at the major terminal markets from a peak level of 1.5 lakh bales past three months. It includes 13,000 bales from northern States, 24,000 bales from Gujarat, 7,000 bales from Madhya Pradesh, 8,000 bales from Maharashtra, 9,000 bales from Andhra Pradesh and 3,000 bales from Karnataka.

Cotton crop for the current season October 2004-September 2005 is estimated at 240-245 lakh bales (of 170 kg), traders said.

Total inflows have already touched 195 lakh bales. Maharashtra Federation has procured about 42 lakh bales, while Cotton Corporation of India (CCI) has purchased about 24 lakh bales.

"Fresh inflows from southern states - Andhra Pradesh, Tamil Nadu and Karnataka - are yet to pick up," Mr Chandulal Thakkar, a cotton trader said.

The market was expected to remain steady at the current level due to purchases by government agencies, Mr Thakkar said.

"Cotton mills may continue to buy as export demand is good, mainly from Far-East," an exporter said.

Traders have so far contracted about 4 lakh bales for export to Far-Eastern countries, including Taiwan, South Korea, Vietnam and China. "Majority exporters are mainly fulfilling their old commitments," Mr Bhavik Mehta, another cotton dealer said.

"I believe this is the right time for mills to enter into the market for fresh purchases," Mr Mehta said.

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