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OUTLOOK-India cotton seen steady to weak on sluggish demand

Source : REUTERS
Last Updated: Tue, Mar 19, 2013 12:50 hrs

MUMBAI, March 19 (Reuters) - Cotton prices in India, the world's second-largest producer, are seen trading steady to weak this week due to a slowdown in exports at higher prices, but declining domestic supplies and firm international markets are seen supporting prices.

The April cotton futures contract on the Multi Commodity Exchange (MCX) ended 0.63 percent up at 19,160 rupees per bale of 170 kg each.

"Due to higher domestic prices fresh export orders have slowed down," said Arunbhai Dalal, a trader from Ahmedabad in Gujarat.

The government, through the Cotton Advisory Board, has estimated 8 million bales of exports for the year to Sept. 30, of which traders estimate 6.5-7 million bales to have already been shipped.

Cotton supplies to spot markets across the country are at around 100,000 bales per day, down from 200,000 bales per day at the start of February, according to traders.

Cotton supplies since the beginning of the year in October 2012 until March 10, 2013 were at 22.56 million bales, down from 23.73 million bales a year earlier, the Cotton Corporation said on its website.

On Tuesday, the most-traded domestic spot Shankar-6 variety closed 400 rupees lower at 38,700 rupees per candy of 356 kg as compared with Saturday's close, data from the Cotton Association of India showed.

The government has procured around 2.5 million bales of cotton and spot traders expect it to start releasing the procured stocks from April when local supplies would completely dry up.

In New York, the most active May contract on the Intercontinental Exchange was up 0.08 percent at 90.90 cents per lb at 1238 GMT.

China, the world's top consumer of cotton, will issue extra import quotas to textile mills by around April after purchases for the government's stockpile cut domestic supplies, trade sources said on Friday. (Reporting by Meenakshi Sharma; Editing by Subhranshu Sahu)




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