Weak monsoon in the major cotton producing areas along with concerns over lower acreage in 2012-13 crop year also supported the firm trend.
Cotton prices have increased by 8% to 10% in the past two days with slow arrivals in the market yards. Traders are expecting a further increase of 5% to 10% in the coming days.
The demand for ginned cotton has picked up. Textile and yarn mills from all over India are making purchases and this is expected to keep prices firm for the coming months before new arrivals begin in October, President of Cotton Association of India told to ET reporters.
The domestic textile and yarn companies were going for cotton imports for extra-long staple from the US and Egypt, coarse varieties from Pakistan, medium-staple varieties from Africa and Central Asian countries. The imported cotton is cheaper by 4% to 5% compared to the domestic varieties and is superior in quality.
Rains were 23 percent below average between 01 June- 11 June. India’s monsoon rains were 3 pct below average in cotton growing southern Andhra Pradesh state in past week . India’s monsoon rains are as much as 80 pct below average in cotton-growing Gujarat state in past week.
USDA lowered its estimate for world 2012/13 cotton ending stocks to 72.39 million (480-lb) bales, down 2.85 percent from the record 74.51 million bales forecast in its June supply report.