The price of cotton in the international market is now the lowest since August 2009
“This is mainly due to the threat that China (till now a big importer) might offload its reserve cotton in the global markets,” said Prerana Desai, vice-president at Edelweiss Integrated Commodity Management. Cotton futures on the Intercontinental Exchange are down 16 per cent from last July.
This would make further export by India unviable. So far this cotton year, India has exported 4.4 million bales (170 kg each). The Cotton Advisory Board was expecting seven mn bales of export this year. At present, export is taking place to Pakistan and Bangladesh.
With falling global prices and farmers holding huge stock, and expecting higher demand due to a lower crop, offloading has begun, say trade sources. Prices in the local market have fallen to Rs 33,400 a candy (356 kg) or Rs 9,364 a quintal.
Edelweiss, the financial consultancy, expects the downside to Indian prices would be limited. For, at lower prices, demand from exporters and millers will increase