The Hindu Business Line : Cotton prices slide on higher arrivals

It is time for the cotton textile mills to feel light on their raw material front. The start of the new cotton season has heralded softening of prices.

Prices of most popular cotton varieties are tapering off amidst the rising daily arrivals of cotton in most terminal markets across the country, cotton trade sources here say.

There has been a price slide ranging from three to five per cent or Rs 500 to Rs 700 per candy (of 355.56 kg) across all varieties in the last 10 days as the market is poised to witness heavy arrivals in the coming weeks, said Mr K.N. Viswanathan, Secretary of the South India Cotton Association (SICA).

The dip in prices at the season's opening, according to Mr Viswanathan, has led the textile mills to keep their option on cotton procurement open. Right now the mills are not in a hurry to buy, especially when the domestic market is to handle yet another high volume crop this year too and the international cotton prices too are easing out.

Global phenomenon

The global cotton prices have declined by 4 cents (per pound) between last month and this month. This phenomenon has also temporarily halted the interests of cotton exporters from India who are staying away from the market.

Unlike last year during Diwali when the daily arrivals was 45,000 bales or so, this year around the same time, the daily cotton arrivals have swelled to 76,000 bales which indicates the kind of volume surge in the new cotton the market will have to handle for the 2006-07 season.

Mr Viswanathan expects the daily arrivals during the mid-January 2007 to peak out at 2 lakh bales as compared to previous years' (peak arrivals in January) average daily volume of 1.75 lakh bales.