Cotton Insights for July 29, 2016

  • Cotton prices eased today in the major markets across the country amid sluggish demand.
  • Poor demand and favorable condition for crop development pushed Cotton prices lower in North and Central India whereas it continued to remain steady in South India.
  • Some buying support was witnessed, but most mills still not taking risk to purchase Cotton due to major losses incurred as poor yarn sales has impacted their profitability.
  • The mills are loosing Rs 7-8/kg in yarn production, which has forced them to slowdown Cotton consumption.
  • Unsold stocks of Cotton in North India at present is around 1 lakh bales.
  • Crop is in excellent condition in entire North India excluding in some parts, and in case favorable weather persist prolonged than arrivals will kick in from September 15.
  • Cotton growers in Gujarat fear a pest attack due to rainfall deficit of 50% so far this season.
  • India Cotton Sowing so far is down by 12.72% and the overall acreage is likely to touch 10.2-10.4 million hectares as against 11.9 million hectares in the previous season and 12.8 million hectares in the season before.
  • A 10% shortfall is likely in the overall Cotton acreage which could result in a 10% deficit in the total output.
  • China’s mills had surged government to release more Cotton from state reserves, as fewer quotas for low-tariff imports and higher demand for local yarn tighten supplies.
  • Quarterly outlook report by World Bank stated that India’s Cotton production is expected to increase to 6.45 million tonnes this season, from 5.88 mt in 2015-16.
  • Cotton prices next week may find direction in support with weekly sowing data progress.