Sunday, 29 July 2012

Cotton Price Trends in India



Indian Textile Mills are ramping up imports of cotton



Mills in India, the world's second biggest cotton producer have already imported 500,000 bales and have signed contracts for around 1 million bales at 75-80 cents per lb, compared with the local price of about 88 cents. This can be attributed to the following two reasons. 

a. Tight Domestic Supplies of Cotton 

- Poor rainfall in top producing Gujarat State. Saurashtra and Kutch regions of Gujarat, the country’s largest producer, have received 72% less than the usual rainfall by this time
- A rally in Soyabean prices is prompting some farmers to ditch cotton for Soyabean.
- Record export of good quality cotton earlier this year, with lower quality cotton left this year. 
- Harvesting is getting delayed because of late arrival of Monsoon. If it gets delayed beyond Sep, the domestic cotton prices will sky rocket. 

b. Lower Prices Abroad

Domestic cotton prices are ruling around 88 cents per pound, freight on board, around 14% higher than the African fibre and 10% than the crop in the US, the world’s largest cotton exporter


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