The Hindu Business Line : Raw cotton prices remain firm

Coimbatore June 3 Raw cotton prices continue to remain firm despite the widespread complaints among the spinners on tight liquidity position, aggravated by the appreciating rupee over the dollar.

Growers and ginners from cotton production centres are said to be no hurry to liquidate cotton stocks held by them as they are watchful on the on-set of monsoon.

Postponing transaction under summer heat condition is a move penned by the farmers in the production centres to ward off higher weight loss in raw cotton normally associated at this point of time and this is at the back of the firming cotton market where the prices of most popular varieties have posted two-three per cent rise in the past two weeks, cotton trade sources here said.

J-34, Mech-1/H-4, Shankar-6 and MCU-5 prices surged during this period.

This is notwithstanding the fact that the domestic cotton market is saddled with those volume of cotton that were booked for exports but eventually failed to be shipped out owing to the currency fluctuation.

Export volume

Of the 45 lakh or so bales booked for export, the quantity of cotton that failed to be lifted by the exporters this time is estimated to be around 10-12 lakh bales. `This surplus cotton gets added to the unsold cotton already in the market. Besides some more cotton, the late picks from the plants which are yet to arrive, would make up the woe for the market sooner', the sources maintain.

On the demand side, the trade sources indicated that the increase in the spinning capacity compared to last year and most mills preferring this time to opt for producing coarser count yarn would be the factors for the increased cotton consumption anticipated this year.

Despite the poor yarn off-take in the market, the spinners could hardly stagger their production, leading to build up of yarn inventories.

The market is also agog with reports that many spinners are planning to cut the yarn prices by three to five per cent for the June yarn deliveries considering the tight liquidity, the sources said.