Ginners reluctant to sell at low prices as cotton arrivals slow down

As the daily market arrivals of cotton have slowed down amidst a subdued price trend, ginners are seen reluctant to sell their produce at lower prices. Prices of cotton, which were on a downtrend till last week are seen stabilising at the current levels, even as the futures price on ICE have shown a slight uptake.

• Also read:Multinationals in India start offloading cotton as global prices decline on weak demand

Compared to the last month, the market arrivals have almost halved and slipped below 50,000 bales (170 kg each) on a daily basis. Major arrivals on Saturday were in Maharashtra at 21,300 bales and in Gujarat at 18,100 bales, with other States accounting for the rest.

“Ginners are not ready to sell, while the buyers are not ready to purchase at the current levels,” said Pradeep Jain, President, Khandesh Gin Press Factory Owners Association in Jalagon. Cotton prices, which are hovering around 57,000 per candy, should not go below these levels, he added.

With the July contract up on ICE, the multinationals operating in India increased the selling price by ₹600-700 per candy on Monday, said Ramanuj Das Boob, a sourcing agent in Raichur.

The July cotton contract on ICE, which touched a high of 82.58 cents was hovering around 81.65 on Monday. On MCX, cotton contract for May 31 delivery was up 1.79 per cent or by ₹1,040 at ₹59,000. Interestingly, Cotton Corporation of India (CCI), which had reduced the price by ₹1,000 per candy, sold some 28,103 bales to the mills on Monday.

Unlikely to dip

Boob said the prices are unlikely to go down from the current levels due to the low market arrivals and stabilise at these levels. The market may move up based on the futures on ICE and the yarn demand, he said. “At lower prices, ginners are reluctant to sell, because the availability of raw cotton is very less. There is no availability in the States. So ginners, don’t want to sell at lesser prices in anticipation that prices may go up further and are preferring to wait and watch,” Boob added.

“Further, the demand for cotton remains weak as the yarn prices have reduced a bit and there is not much of demand in yarns. Mills are also buying at a slow pace as per their needs,” Boob added.

Anand Popat, a domestic and international agent in Rajkot said the recovery in the cotton market has started from Monday with the benchmark Sankar 6 prices gaining by ₹500 per candy.

He attributed the recent volatility in the global price trends to speculation and said that there was no fundamental reason for the sharp price movement. “Ginners are troubled by the current downtrend caused by the speculation and so also the buyers are in a wait and watch mode,” Popat said, adding that prices are unlikely to go down further.

• Also read:Cotton Corporation of India’s procurement at MSP 32.85 lakh bales so far this season

Stating that India’s cotton balance sheet is tight, Popat said the daily cotton arrivals are in the range of 40,000-50,000 bales, while the demand is about 1 lakh bales. Physical cotton prices are expected to be steady to firm in the coming days with the potential for a long-term stable to firm trend, Popat said.