Cotton prices may remain firm this year on low output

New Delhi: Cotton prices are expected to remain firm this year due to lower production in the country, apart from rising consumption in both the domestic and overseas markets, exporters and analysts said.

Prices may rise by March end, when market despatches will reduce. A weakening of the rupee will also help overseas demand for India’s cotton exports, they said. India shipped about 25 lakh bales of cotton in the four months ended January to Bangladesh, Pakistan, Indonesia, Vietnam and China.

“In 2019, due to tighter supply situation as well as robust export demand following trade tension between the US and China, cotton prices will remain firm,” said Veeresh Hiremath of Karvy Consultants.

cotton graph

He said China had offloaded most of its inventory and is importing from India. “A lot will depend on trade negotiations which India has with China. It is a growing market for Indian exporters,” he said. According to Atul Ganatra, president of Cotton Association of India, prices are expected to go up by March end. “We have shipped 25 lakh bales from October to January and we have kept a target to export 51lakh bales. This will be lower than 68 lakh bales we exported last year,” he said. The CAI said production is expected to be the lowest since 2010-11 at 335 lakh bales for the 2018-19 season due to lower rainfall in the key cotton-growing states and pink bollworm attack. Analysts said buyers should wait for prices to fall before March. “Prices are currently at Rs 20,500 per bale of 170 kg each, which we expect to dip to Rs 8,500 per bale in the short term, before seeing an upward movement to Rs 22,000 by March end or April,” said Hiremath.