NATIONAL NEWS ABOUT COTTON- JANUARY, 2017 JANUARY 27,2017 COTTON RULES FLAT ON MODERATE DEMAND RAJKOT: Moderate demand at the higher level kept cotton price unchanged on Friday. Export buying was limited due to price rise in past few weeks. Trader said that during January most of the time cotton price was gained which decreased the demand from domestic mills andexporters . Gujarat Sankar-6 cotton was traded at ₹42,500-43,000 per candy of 356 kg. About 35,000 bales of cotton arrived in Gujarat and 1.55 lakh bales arrived in India. Kapas or raw cotton increased by ₹5 to ₹1,090-1,155 per 20 kg and gin delivery kapas stood at ₹1,160-1,200 per 20 kg. According to traders, much rise in price may reduce the demand but on the other hand, as farmers are not selling cotton fall may be limited in the cotton rates. Source:http://www.thehindubusinessline.com/markets/commodities/cotton-rules-flat-on- moderate-demand/article9505909.ece
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NATIONAL NEWS ABOUT COTTON- JANUARY, 2017
JANUARY 27,2017
COTTON RULES FLAT ON MODERATE DEMAND RAJKOT: Moderate demand at the higher level kept cotton price unchanged on Friday. Export buying was limited due to price rise in past few weeks.
Trader said that during January most of the time cotton price was gained which decreased the demand from domestic mills andexporters .
Gujarat Sankar-6 cotton was traded at ₹42,500-43,000 per candy of 356 kg. About 35,000 bales of cotton arrived in Gujarat and 1.55 lakh bales arrived in India.
Kapas or raw cotton increased by ₹5 to ₹1,090-1,155 per 20 kg and gin delivery kapas stood at ₹1,160-1,200 per 20 kg.
According to traders, much rise in price may reduce the demand but on the other hand, as farmers are not selling cotton fall may be limited in the cotton rates.
Increased supply may change the dynamics in the second half of the cotton year
So far, 2017 has been good for cotton with future prices rising 10 per cent or so in the last two weeks onrenewed hope of buying as the impact of demonetisation recedes, on fears of supply shortage and procurement support from the Cotton Corporation of India (CCI).
Globally, cotton traded firm in the first half of cotton year 2016/17 (August-July), hit a near five-month high (75 cents/lb) on January 5 because of supply shortage as the bulk of the crop was still being harvested. Of late, the expectation of reduced supply from India has added to the positive sentiment. However, things may change in the second half of the cotton year on increased supply, leading to a correction in prices. The downside may, however, be capped on strong recovery in the US economy and rising income in developing countries.
Global factors
According to the International Cotton Advisory Committee (ICAC), 2016-17 is expected to begin with a carry-forward stock of 19.3 million tonnes (mt) while production is estimated at 22.8 mt (up 8 per cent year-on-year), putting the total supply for the year at 42.1 mt against a consumption demand of 24.1 mt. Thus, 2016-17 is likely to end a closing stock of 17.9 mt, down 7 per cent from 2015-16. However, the global stock-to-use ratio (excluding China) is expected to increase from 50 per cent to 53 per cent, putting moderate pressure on cotton prices in the second half.
Barring China, higher production is expected from othertop producers such as India, the US, Pakistan, Brazil, and Australia. The US is expected to produce 3.6 mt due to improved weather, enhanced yields and better crop acreage. Crackdown on pink bollworm is likely to improve output in Pakistan, but it will still be below the average. Production in Australia and Brazil, the keyexporters , is likely to increase by 64 per cent and 10 per cent, respectively.
China no longer price driver
China is expected to produce 4.55 mt of cotton in 2016-17 against 4.75 mt in 2015-16. China is still holding inventory of more than a year and will resume the next round of cotton sales from domestic reserves on March 6, with daily sales volume set at 30,000 tonnes.
The USDA expects China toimport slightly more cotton in 2016-17 to 0.98 mt. It imported only 54,900 tonnes of cotton in November, down by 35 per cent (year-on-year) while for 2016 as a whole import is down 42 per cent to 0.75 mt.
Expectations of an improved global economy and thus better prospects forclothing demand will always provide the underlying support to cotton prices but prices of polyester fibre will remain a key factor in determining cotton prices. Polyester prices have increased a bit recently, with increase in crude oil prices post OPEC deal on production.
Domestic factors
The current firmness in Indian cotton prices is seen because of slower arrivals impacted by demonetisation and fears of supply shortage despite estimate of increased cotton production by the Cotton Association of India (CAI) at 34.5 million bales (1 bale =170 kg) of cotton in 2016-17 (October-September) compared to 33.8 million bales in 2015-16.
According to the Cotton Corporation of India, the season’s total arrival till December’16 has reached 7.5 million bales, a drop of 25 per cent to that in 2015.
However, the uncertainty over production figures remains because of the reduction in acreage by over10 per cent. The private participants are expecting lower production at 31-31.5 million bales. The procurement support from CCI, after a gap of four years, to procure 0.15 million bales of cotton in the year ahead is expected to strengthen demand. At the same time, with more money coming into people’s pockets (waning impact of demonetisation) creating more demand is likely to be somewhat balanced with increased arrival pressure restricting the extent of upside.
India’sexport of cotton is expected to fall by 34 per cent to 0.82 mt in 2016-17 due to demonetisation-led squeeze in supply when prices were running low and now with domestic prices running high, exports should be lower.
Outlook
Cotton is likely to trade steady on an expected shortfall in production, coupled with procurement support from CCI and improved domestic buying with more cash in hand. However, a likely increase in cotton arrivals, cheaper imports and not-so-bright export prospects will limit the extent of upside.
COTTON EXPORTERS IN A FIX AS PRICES SURGE AMID SPECULATION
Prices of the fibre up by ₹2,500 per candy within ashort span of a week to touch ₹42,500
AHMEDABAD
Sharp surge in cotton prices has left exporters in a lurch with prices touching ₹42,500 per candy (each of 356 kg). While the Cotton Corporation of India (CCI) has given an upward crop estimate of 351 lakh bales, exporters hold speculators responsible for the artificial rally in the fibre crop.
Export prospects hurt
“The prices have surged by about ₹2,500 per candy within a short span of a week to touch ₹42,500. This happens at a time of peak arrival season and good crop outlook. There is no short supply in the market, but prices continue to head north, which is hurting the export prospects,” said an exporter from Gujarat. Insiders maintained that as many as 200,000 bales (of 170 kg each) were committed for exports . “But at this price, procurement isn’t possible and we can’t make new export commitment,” the exporter stated.
However, some exports have taken place at the rate of 82 cents, which works out to ₹42,000/candy. “But that is very low quantity. The rally is primarily due to speculation of a short supply,” a ginner from Kadi informed.
On the MCX futures, prices of the fibre had touched ₹20,270 per bale, which works out to ₹42,447 per candy on Friday.
Ample supplies
According to ginners, cotton availability is ample and there was no fundamental reason for the short-term rally.
“There were issues during the first two months of demonetisation. Farmers were not bringing the crop because of the lack of liquidity. But the condition has improved now, but arrivals haven’t,” the ginner stated.
Amid surging cotton prices, farmers anticipate higher return for the crop, i.e. raw cotton or kapas. Kapas had touched ₹1,100 per 20 kg or ₹5,500 a quintal. “Many farmers anticipated realisation to further go up, hence held back the crop, causing an artificial rally,” an expert said here.
Cotton markets witnessed fall in arrival due to festival mood for Makar Sankranti festival that is on January 14. Price remained steady on limited demand. Trader said that as against 40,000 bales, cotton arrival reported lower by 8,000 bales to 32,000 bales in Gujarat .
Mills demand was limited andexporters were not too active in the market. Gujarat Sankar-6 cotton traded at ₹42,000-42,300 per candy of 356 kg. About 32,000 bales arrived in Gujarat, 50,000 bales in Maharashtra and 1.44 lakh bales in India.
At this time in 2016, cotton arrival was about 2 lakh bales. Kapas or raw cotton decreased by ₹5 to ₹1,110-1,120 per 20 kg and gin delivery kapas was stood at ₹1,120-1,175 per 20 kg. Cotton seed remained flat at ₹525-555 per 20 kg.
Sharp surge in cotton prices has left exporters in a lurch with prices touching ₹42,500 per candy (each of 356 kg). While the Cotton Corporation of India (CCI) has given an upward crop estimate of 351 lakh bales, exporters hold speculators responsible for the artificial rally in the fibre crop. Export prospects hurt “The prices have surged by about ₹2,500 per candy within a short span of a week to touch ₹42,500. This happens at a time of peak arrival season and good crop outlook. There is no short supply in the market, but prices continue to head north, which is hurting the export prospects,” said an exporter from Gujarat. Insiders maintained that as many as 200,000 bales (of 170 kg each) were committed for exports. “But at this price, procurement isn’t possible and we can’t make new export commitment,” the exporter stated. However, some exports have taken place at the rate of 82 cents, which works out to ₹42,000/candy. “But that is very low quantity. The rally is primarily due to speculation of a short supply,” a ginner from Kadi informed. On the MCX futures, prices of the fibre had touched ₹20,270 per bale, which works out to ₹42,447 per candy on Friday. Ample supplies According to ginners, cotton availability is ample and there was no fundamental reason for the short-term rally. “There were issues during the first two months of demonetisation. Farmers were not bringing the
crop because of the lack of liquidity. But the condition has improved now, but arrivals haven’t,”
the ginner stated.
Amid surging cotton prices, farmers anticipate higher return for the crop, i.e. raw cotton or kapas.
Kapas had touched ₹1,100 per 20 kg or ₹5,500 a quintal. “Many farmers anticipated realisation to
further go up, hence held back the crop, causing an artificial rally,” an expert said here.
January 13, 2017
Low cotton arrival ahead of Sankranti festival
RAJKOT, JANUARY 13:
Cotton markets witnessed fall in arrival due to festival mood for Makar Sankranti festival that is
on January 14. Price remained steady on limited demand. Trader said that as against 40,000
bales, cotton arrival reported lower by 8,000 bales to 32,000 bales in Gujarat .
Mills demand was limited and exporters were not too active in the market. Gujarat Sankar-6
cotton traded at ₹42,000-42,300 per candy of 356 kg. About 32,000 bales arrived in Gujarat,
50,000 bales in Maharashtra and 1.44 lakh bales in India.
At this time in 2016, cotton arrival was about 2 lakh bales. Kapas or raw cotton decreased by ₹5
to ₹1,110-1,120 per 20 kg and gin delivery kapas was stood at ₹1,120-1,175 per 20 kg. Cotton seed
Mills claim adulteration in Gujarat cotton, petition Irani
Spinning mills in southern India have complained that the cotton purchased from Gujarat is
adulterated and causing problems.
The textile mills used to import five to six lakh bales of cotton to meet the customers’
requirements.
Spinning mills in southern India have complained that the cotton purchased from Gujarat is
adulterated and causing problems. The mills claimed that the section of ginners in Gujarat are
mixing cotton waste (comber noil-waste extracted by spinning mills) in the virgin cotton with a
profit motive, which they claimed not only impact the image of Gujarat, a major producer and
supplier of quality cotton in the country, but also the strenuous efforts put in by the farmers.
In a statement on Wednesday, Southern India Mills Association (SIMA), said that despite the
problems faced on many fronts, the only advantage for the predominantly cotton-based textile
industry is availability of home grown cotton. The textile mills in southern states mainly depend
on cotton from states like Gujarat, Maharashtra for the consumption. These mills mainly prefer
Shankar 6 variety of cotton grown in Gujarat as it is suitable to produce hosiery yarn for garment
sector, especially Tirupur. Among the southern states, Tamil Nadu alone consumes more than 120
lakh bales of cotton annually while producing only around 5 lakh bales.
M Senthilkumar, chairman, SIMA, said the industry has been facing the problem of adulteration
for the last few years and the magnitude has become several fold from the last cotton season. This issue was brought to the notice of the agriculture minister of Gujarat state and the Gujarat Ginners
Association in December 2015.
However, there was no action on the part of Gujarat government.
As a result, the textile mills have reduced the volume of purchase from Gujarat by 40-50% and
are sourcing from Telangana besides importing from countries like West Africa and Australia.
Normally, the textile mills used to import five to six lakh bales of cotton to meet the customers’
requirements, especially the Extra Long Staple (ELS) cotton.
But in the last cotton season, due to adulteration problem, 23 lakh bales of cotton were imported
incurring cost towards foreign exchange of Rs 3,600 crore for the additional 17 lakh bales, he said.
“Since the adulteration problem has still been persisting, the association on Wednesday sent a
representation to the union textile minister Smriti Irani, requesting her intervention and prevail
on the Gujarat government to take necessary steps to curb the adulteration practice followed by
certain section of the ginners in the state in the interests of cotton farmers, traders, spinners and
also the knitted garment manufacturers across the nation,” he said.
Outlook remains bullish for cotton Cotton prices have begun the New Year with a bang. After being stuck in a narrow range all through December, cotton prices broke above a key resistance point by surging higher. The cotton futures contract traded on the Multi Commodity Exchange (MCX) is up about 6 per cent and is currently trading near ₹20,120 per bale. Cotton prices were on a strong downtrend in the second half of 2016. The MCX cotton contract recorded a peak of ₹23,990 in July and tumbled to a low of ₹18,270 in November. However, the downtrend halted at this low and reversed higher from there. After consolidating in a sideways range in December, the prices have resumed their upmove. Along with restricted arrivals, the Cotton Corporation of India’s decision to purchase at market price from various parts of the country has also aided this price reversal. The recent rally eases the downtrend that was in place between July and November last year and also signals a trend reversal. Medium-term view The outlook is bullish. The 21-day moving average is turning around and is signalling a cross-over above the 200- and 100-day moving averages in the coming days. This strengthens the bullish view and suggests that the downside could be limited in the short- term. There is strong support in the ₹19,500-₹19,200 band. Though an intermediate dip to test this support region cannot be ruled out, a break below this support zone is unlikely. Immediate resistance is at ₹20,443. A strong break above this hurdle can take the contract higher to ₹21,120 — the 50 per cent Fibonacci retracement resistance point. Traders with a medium-term perspective can make use of dips to go long near ₹20,000. A stop-loss can be placed at ₹19,350 for the target of ₹21,000. Accumulate longs on dips near ₹19,500. Revise the stop-loss higher to ₹20,150 as soon as the contract moves up to ₹20,650. Source: http://www.thehindubusinessline.com/markets/commodities/outlook-remains-bullish-for-cotton/article9471494.ece
Cotton prices continued to moved up on the back of tight supply and rising demand from domestic mills.Export enquiries too supported the trend. Gujarat Sankar-6 cottontraded up by ₹100 to ₹41,000-41,300 per candy of 356 kg.
About 1.44 lakh bales (of 170 kg) arrived all over India. Kapas increased by ₹5 to ₹1,050-1,120 per 20 kg and gin delivery kapas at ₹1,120-1,150. Cottonseed gained ₹10 to ₹515-525 per 20 kg.
Global cotton prices likely to fall in second half of season
AHMEDABAD, JANUARY 6:
Citing higher cotton supply scenario for the season 2016-17, the International Cotton Advisory Committee (ICAC) has hinted towards a bearish trend in the prices for the fibre in the second half of the year.
The ICAC Secretariat has forecast the season-average for Cotlook A Index in 2016-17 (starting October-September) will range between 66 and 83 cents per lb, with a midpoint of 74 cents/lb, which would be 4 cts/lb higher than last season.
But the world cotton production in 2016-17 is likely to rise by 8 per cent to 22.8 million tonnes (mt) and the world consumption is likely to remain stable at 24.1 mt , which may put pressure on the prices in the latter half of the season, the ICAC noted.
World ending stocks may fall by 7 per cent to 18 mt in 2016-17, though stocks outside of China are expected to grow by 6 per cent to 8.7 mt .
According to ICAC, the current season began with lower stocks, particularly from countries in the Southern Hemisphere, which saw ending stocks in 2015-16 fall by 21 per cent to 1.6 mt , the lowest since 2009-10.
The shortage in supply carried through the first few months of 2016-17 season thereby keeping the prices firm.
Indian picture
In Gujarat — one of the key producers of the commodity in India — prices for raw cotton hovered in the range of ₹5,500-5,670 a quintal inching towards new record.
Traders cited the reduced arrivals and cash shortage in the banks as the reason for the rally in the cotton prices, whereas most believed that the rally may not continue longer on good production.
ICAC predicts India’s cotton production to increase by 4 per cent to just under 6 mt , making it the world’s largest producer.
Cotton rates firm on Cotton Corporation of India intervention
Cotton prices have moved up and the market sentiment has improved with the Cotton Corporation of India (CCI) resorting to purchase of the commodity at commercial rates from different parts of key cotton growing regions in the country.
Cotton prices have moved up and the market sentiment has improved with the Cotton Corporation of India (CCI) resorting to purchase of the commodity at commercial rates from different parts of key cotton growing regions in the country.
According to top officials of CCI, prices have now firmed up to R41,500 per candy from the prevailing rates of R38,000 and farmers are now beginning to get better rates from traders.
International rates are currently at R42,000 per candy. CCO has stepped in to protect the interests of farmers and industry, M M Chokhalingam, CMD (in-charge) said.
CCI has purchased 10,000 bales so far and for the last couple of days has been going slow on purchases because rates have improved, he said. This is the first time after a gap of four years that CCI has stepped in to make commercial purchases.
Chokalingam said the Corporation will step in aggressively if the market rates slip down and it shall remain for the entire season. The Corporation expects to purchase around 15 lakh bales for the season of 2016-17.
In the start of the season, cotton prices were ruling between R5,000 and R5,200 per quintal in various markets while Minimum Support Price (MSP) was at R4,160 per quintal.
However, prices dropped down later because of which the CCI intervention helped, he said.
Chokhalingam pointed out that CCI now uses the e-purchase and e-sale modes for sale and purchase of cotton and therefore had called for bids through e-auction.
Apart from MSP operations, CCI also has to perform commercial operations at times in the interests of the farmers and to keep the market stable. If CCI does not have stocks then traders can control markets and bring out cotton during lean season,” he explained.
“The intent of the CCI is to ensure that this does not happen and keep prices uniform. Instead, CCI will purchase some 15-20 lakh bales of kapas and make it available to the industry in times of need,” he said.
CCI has been purchasing kapas or raw cotton from markets wherever the prices are lower, Chockalingam said, adding that the commercial purchase of up to 15 lakh bales would be mainly from the west, central and southern parts of the country as prices in the northern markets are ruling much higher.
Meanwhile, the Maharashtra State Cooperative Cotton Growers Federation has urged both the state and the Centre seeking permission to purchase cotton from farmers at commercial rates.
We are usually the sub-agents for CCI and have been purchasing cotton at MSP rates but this time the prices are higher and therefore we would like to purchase at market rates, N P Hirani, chairman of the federation said.
Chokhalingam said that the Corporation has authorised the federation to make purchases. It is only private groups that have been told to register as buyers or sellers, he clarified.
The Centre had declared an MSP of R4,160 per quintal for the current season for the long staple fibre and R3,860 for the medium staple length. Besides protecting cotton growers’ interests, CCI caters to the needs of its customers, such as the National Textiles Corporation and several co-operative mills. It also meets the demand of private sector mills, mainly during the lean season, by releasing the fibre from its stocks.
Over the last three-four years, CCI has stepped into the markets to protect farmers when prices fell below the minimum support price (MSP) levels. Although Indian cotton acreage had dropped by close to a tenth this year to around 110 lakh hectares higher yields, on account of widespread rains in key producing states, it is expected to help maintain output.
Cotton prices moved up on the back of rising demand from domestic mills. Moreover, goodexport enquiries and tight supplies at the producing States have supported the cotton price to increase on
Monday.
Traders said at present, cotton supply is tight and domestic mills’ demand increased which lifted cotton prices. On the other hand, enquiries fromexporters are higher. Gujarat Sankar-6 cotton was up ₹100 to ₹39,900-40,200 per candy of 356 kg.
About 22,000 bales of 170 kg arrived in Gujarat and 1.35 lakh bales arrived in India. Kapas or raw cotton traded up on strong demand for cottonseed from oil millers. Kapas gained ₹10 to ₹1,040-80 per 20 kg and gin delivery kapas stood at ₹1,080-1,120. Cottonseed traded up by ₹10 to ₹480-520 per 20 kg.