India’s Cotton prices to surge further on production drop

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MUMBAI (Commodity Online): India’s cotton production may fall further from the earlier estimates for 2012-13 on lower acreage and deficient rainfall affecting the growth of the crop. This is likely to push the price of the commodity higher.

Earlier, according to reports, India’s cotton production for 2012-13 was pegged at 32.2 million bales, down 7.8% from 35.2 million bales, last year. Lower price realisation for the farmers had been the major reason for the lower area under crop.

Along with acreage, deficient rainfall across the country affected the Kharif crop sowing as well as its growth. According to Indian Meteorological Department (IMD), the monsoon during season fell 22% below long period average.

Meanwhile, the demand from the yarn mills are high on the back of ongoing festival season.

This is likely to pull the production of cotton downwards. During the month of July till date (July 23rd), in National Commodity and Derivatives Exchange (NCDEX) for February delivery, the commodity surged 11.84% to Rs 1131.50 per qtl.

According to reports, if rainfall deficiency continues, it would affect the cotton production severely and would further fuel the price of the commodity in the domestic market.

In India’s , for February delivery, cotton traded at Rs 1092.5 per qtl on 23rd July at 15:30 IST.

Source: http://www.commodityonline.com/news/indias-cotton-prices-to-surge-further-on-production-drop-49336-3-49337.html

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