MUMBAI, March 25
Cotton prices in India, the world's second-largest producer, are expected to trade range bound to lower this week amid thin trading in spot market ahead of a festival and lukewarm demand from local buyers and exporters. Indians will celebrate the festival of Holi on March 27 and major spot markets are expected to remain shut for a day or two.
The April cotton futures contract on the Multi Commodity Exchange (MCX) ended up 0.7 percent at 18,740 rupees per bale of 170 kg each. "Fresh exports are very limited as of now because they have already touched the government limit. Local buyers are also staying away on hopes of further fall in prices with the release of government stock," said Ambika T.B, analyst at Karvy Comtrade.
The government has estimated 8 million bales of exports for the year to Sept. 30, of which traders estimate almost all have already been shipped. Cotton supplies to spot markets across the country are at around 100,000 bales per day, down from 200,000 bales per day at the start of February, according to traders. Cotton supplies, since the beginning of the year in October 2012 until March 17, 2013, were at 23.75 million bales, down from 24.12 million bales a year earlier, the Cotton Corporation said on its website.
Ambika expects the April contract to trade in the range of 18,350-19,250 rupees per bale of 170 kg each this week. On Saturday, the most-traded domestic spot Shankar-6 variety closed 100 rupees lower at 38,000 rupees per candy of 356 kg, data from the Cotton Association of India showed. Industry and trade estimates government procurement agencies have procured between 2.5 and 3.0 million bales and they would start releasing the stocks from April.
In New York, the most active May contract on the Intercontinental Exchange was down 0.76 percent at 86.63 cents per lb at 1201 GMT. Cotton on ICE Futures U.S. fell after Thomson Reuters reported that China and India, the world's No. 2 producers, plan to sell some of their state stockpile to help deflate soaring domestic prices. Looking ahead to next week, traders are braced for the U.S. Department of Agriculture's much-anticipated planting survey due for release on March 28.
(Source: Reuters)