As of Tuesday, Shankar-6, the benchmark for cotton exports, dropped to ₹55,150 per candy of 356 kg, the lowest level since January 18. On the InterContinental Exchange (ICE) in New York, cotton March contracts were quoted at 84.34 US cents a pound (₹55,450/candy). Prices on China's Zhengzhou for March contracts also increased to 16,050 yuan a tonne (₹66,875/candy), up from 15,855 yuan (₹66,425) over the weekend.
Open interest on ICE has risen to 0.46 million US bales (62 lakh Indian bales), indicating some bullish sentiment, even though current arrivals exceed demand. Mills are buying approximately 1.25 lakh bales daily, with additional purchases from the Cotton Corporation of India (CCI) and multinational companies (MNCs).
MNCs play a significant role in supporting the market, with their purchases accounting for 40% of arrivals. They are likely hedging their positions on ICE while buying in the Indian market.
While arrivals are higher due to a good Indian cotton crop, prices may rise once arrivals decrease. However, the presence of last year's held-up stocks being brought to the market, combined with this year's crop, complicates the situation.
The Cotton Association of India reported 2.02 lakh bales arriving on Tuesday, with Maharashtra, Gujarat, and Telangana being the major contributors. However, in this volatile environment, textile markets are responding with short-term swings, affecting mills' cotton buying decisions. Mills are cautious, buying based on their yarn and fabric order visibility.
Despite varying estimates, cotton production for the season is expected to be around 315-317.57 lakh bales, impacting price behavior influenced by speculation and other factors.
Tags
India