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Narrow swings in cotton prices

India’s cotton prices witnessed a fluctuation within a narrow range during the second half of February. However, fiber prices came down marginally after the fluctuation. As February witnessed higher market prices, arrival of the fiber has improved and supply has eased. Farmers and traders released the fiber as prices were favorable. At the same time, improved availability has brought down prices too.

The total cotton arrival in the country so far is estimated to be around 19 million bales and current arrival is estimated to be between 1,80,000 to 2,00,000 bales per day across India. It’s estimated that domestic consumption of cotton will improve this year to 29.5 million bales while production will be at 34.1 million bales.

This indicates availability of the fiber in abundance as exports have been slow and some exporters have cancelled export shipments due to strong domestic cotton prices. On the price front, current domestic price of the benchmark Shankar-6 variety was recorded at around Rs 43,000 a candy, which is higher by Rs 300 a candy compared to mid February prices.

On the global front, cotton prices continued with the fluctuation within a narrow range during the second half of February. India’s demonetisation drive has tightened the fiber supply and helped global cotton price gain.