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Major mills commence inventory building

Cotton prices in northern states firm up as mills go on buying spree

Arbind Gupta - Mumbai

Cotton prices in northern states have firmed up considerably in the last one month as all major mills in the region have begun bulk buying after an extended lull period of more than two months. Moreover, the arrivals (north zone) for the new season (2002-03) have also been quite weak at around 15,000 bales per day as against the total mill demand of more than 20,000 bales.

According to market sources, J-34 (Sirsa) which quoted a price of Rs 1,415 per maund during the third week of September, has touched a price level of around Rs 1,630 per maund during the last week of October. Similarly, price of J-34 (Mansa) has shot up to Rs 1,630 per maund from Rs 1,500. During the same period, prices of Shankar and Y-1 firmed up to Rs 17,800 per candy and Rs 15,000 per candy from Rs 17,000 and Rs 14,200, respectively.

“After more than two months of wait and watch situation, almost all major mills in north have jumped into the buyers’ bandwagan. This has suddenly created a big gap between the demand and supply of raw cotton in the region,” trade sources said.

Moreover, experts are also of the opinion that quality of domestic cotton production in the new season has been quite satisfactory during the initial arrivals and this has prompted the mills to build their cotton inventory which has almost touched a nil level.

“Many mills which didn’t buy their cotton demand in the last two months or so and waited for the new arrivals, have found the quality of new cotton excellent in north. They are currently trying to build up the depleted inventory to meet their future requirement,” states Mr Dhrupad Seksaria, a Mumbai-based cotton consultant, who feels that prices will continue to be firm till the second week of November when the arrivals, in the region, are expected to climb up to 22,000 bales. “By mid November, we will see some softening in prices. This will be due to the fact that on one hand mills by that time will be able to build their inventory, on the other arrivals will also peak up to a large extent,” Mr Seksaria stated.

Traders feel that the new season will witness less quantity of imports due to higher prices in the international markets.