Cotton futures rise as demand builds up in India

Kapas or raw cotton futures settled higher on account of emerging demand along with reports of an increase in cotton yarn exports to China.

On the NCDEX, kapas for February delivery gained 3 per cent to Rs 965.5 for 20 kg and the April contract was up 2.1 per cent at Rs 1,015.

Prices of the fibre found support from farmers who were not willing to sell their produce at lower levels. In addition, supply worries due to poor quality of fresh cotton crop delivery in the international market also boosted the price sentiment.

However, fresh arrivals from all over India and higher global cotton ending stocks might cap the gains.

Cotton has been planted on 114 lakh hectares this year, down from last year’s 119.6 lakh hectares.

According to the latest CAB report, exports are likely to drop by 46 per cent to 7 million bales (of 170 kg each) in the 2012-13 marketing year that began on October 1 compared with 12.7 million bales estimated for 2011-12 season.

In the spot market at Surendranagar (Gujarat), the fibre was quoted at Rs 799.4 for 20 kg.

Global Scenario: Global cotton prices are mainly influenced by China, US and India.

USDA estimated US cotton planting for the season 2012-13 at 12.64 million acres (14.74 million acres). It raised its cotton crop output to 17.29 million bales (17.11 million bales) along with upward revision in end stocks 5.6 million bales (5.3).

China's 2012/13 cotton crop is estimated at 31.50 million bales up from previous estimates of 31 million bales.