Cotton arrivals in India have started rising to a three-year high in March. Traders and industry leaders said natural fiber prices are likely to stabilize between Rs 60,000 and Rs 62,000 per candy (356 kg) in view of good quality of arrivals. Prabhu Dhamodharan, convener of the Indian Texpreneurs Federation (ITF), said, "We are seeing a steady increase in arrivals in all markets."
Rising arrivals have left the market confused about the exact production of cotton this season (October 2022-September 2023). Cotton arrivals between March 1 and March 18 are at a three-year high of 2.43 lakh tonnes, according to data from Agmarknet, a unit of the agriculture ministry. Ramanuja Das Bubb, sourcing agent for multinational companies from Karnataka said “The arrivals are good and their quality is excellent. We are facing a peculiar situation this season as farmers have withdrawn their produce and are now ready to sell Are".
Sanjay Gupta, MD & CEO, NCML said, “The arrivals have shown improvement in the last 15 days. However, all India arrivals (Oct-Mar'20) are 30 per cent lower than last season due to holding of stocks by farmers”. Anand Popat, a trader from Rajkot said, “The arrivals have increased as the prices have stabilized in the region of ₹60,000 per candy. But for rains, the arrival is between 1.6 lakh bales (170 kg each) and 1.8 lakh bales,” in cotton, yarn and cotton waste.
Arrivals pick up Agmarknet data showed cotton arrivals rose to 77,498 tonnes last week from 49,573 tonnes a year ago and 30,334 tonnes in 2022. Last week, the Cotton Association of India (CAI) reduced the estimated cotton crop for the current season to 313 lakh bales from last season's 307.05 lakh bales. In its second advance estimate, the Center reduced its crop forecast to 337.23 lakh bales (311.18 lakh bales in the previous season) and the USDA estimated it at 313.76 lakh bales.
Currently ginned (processed) cotton prices of Shankar-6 grade, the benchmark for exports, are ruling at ₹61,750 per candy in Gujarat. Cotton (raw cotton) is at Rs 7,900 per quintal as against the minimum support price of Rs 6,080 per quintal. In the global market, cotton futures for delivery in May on the Intercontinental Exchange (ICE), New York, was trading at 77.90 US cents per pound (₹50,900 per candy). Cotton for delivery in April closed at Rs 61,160 per candy on MCX.
“In the last few weeks, cotton prices have stabilised. We expect this to continue till at least April 10,” said Das Bub. “Demand has stagnated due to global macroeconomic factors such as rising interest rates, volatile financial environment and recession fears. Cotton prices are trading lower in the range of 60,000-62,000," said Sanjay Gupta.
“Spinning mills have started building up inventory, though prices have stabilized gradually, but low demand for yarn is almost affecting their procurement.” “Mills are still not convinced about higher inventories due to muted global demand signals for textile and apparel products. Dhamodharan said, we are only seeing pockets of recovery from some countries due to lack of their reserves.
Sanjay Gupta said that ginners are facing the problem of disparity due to reduction in the prices of seed and oil cake. “Yarn sales are not promising, but demand for better quality yarn is allowing mills to run at good capacity. The arrivals are expected to increase in the coming weeks as there will be additional pressure on prices as farmers liquidate some part of their stocks. Most of the markets and buyers are still cautious about buying. ITF convenor said that the trend of increase in sugar demand is also not going as expected.
As per production forecasts, 13 million bales may hit the market in the next 4-5 months. ITF's Dhamodharan said the current cotton season is expected to be quite long and "signs of weak demand may continue to keep a check on cotton prices".
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