Volatile times: World cotton prices went up by 15% in the last two weeks and corrected 3% or so on Friday.
| Photo Credit: SIVA SARAVANAN S
Even as the demand for cotton from the textile mills remains subdued, traders say the surge in domestic cotton prices in the last two weeks will depend on the demand for textiles and apparels.
According to Nishanth Asher, secretary of the Indian Cotton Federation, more than 60% of the cotton produced this season has come to the market. With prices going up, arrivals have reduced from 1.8 lakh bales a day to nearly one lakh bales. “Spinners are risk averse now as the global demand for textiles is low,” he said.
“It is hard to say now what will happen to the prices. World cotton prices went up 15% in the last two weeks and corrected 3% or so on Friday. Prices will cool down if demand for the main textile products remains subdued,” he added.
The International Cotton Advisory Committee on March 1 said the recent surge in global cotton prices “can be attributed primarily to a wave of speculative buying on the futures market.” The real situation will unfold in the next few months when plantings intensify. If the planted area remains less than the previous season and consumer sentiment improves, prices will increase, it said.
Atul Ganatra, chairman of the Cotton Association of India, said the Intercontinental Exchange (ICE) futures market went from 80 cents to 103 cents for a pound in recent days and reduced slightly on March 1. At current prices, Indian cotton is cheaper than international prices and hence, cotton exports are likely to cross 20 lakh bales this season, he said.
