“The Centre on Thursday allowed registration of unexported quantity out
of the 55 lakh bales (170 kg) quota that was to be shipped by December
15. The country could export only 30 lakh bales by the deadline and the
commerce ministry’s statement permitting fresh registrations with the
Directorate General of Foreign Trade (DGFT) brought new hopes for the
Internationally, prices increased 112.27% on year-to-date basis rising
from 74.96 cents per lb on December 21, 2009. In the domestic market,
cotton made its all-time high of Rs 47,000 in early November and then
fell to Rs 39,500 per candy last Tuesday. ” “..
The rise in the cotton prices owing to intense speculations has
surprised the market. “We have not seen such a sharp rise in our
lifetime. It is very difficult to predict the trends as funds are flush
with liquidity,” said Samir Shah of Bhaidas Karasandas, a leading
He agrees that fundamentals of the commodity are strong and there is no
need of panic. “We will come to know about the shortage of supply only
at the end of the season,” he said.
The latest notification has seen hectic buying by exporters. Ginners who
had to rush to cover their short positions contributed to the sharp
rise. Ginners, who process raw cotton, sold their goods at Rs
39,200-39,500 per candy last Wednesday after the export deadline ended
and sentiment turned weak.
“Sentiment was very weak last Tuesday and people went for selling at a
discounted rate fearing a price fall further to Rs 37,000 levels. But
the government’s announcement changed the situation and prices rose
sharply,” said Bharat Vala, a Rajkot-based ginner. ” “..
Markets opened firm on Monday and now the prices will stabilise, added
Mr Vala who is also the president of Saurashtra ginners association.
Traders don’t expect any sharp correction in the near future as
international market remains firm at a new high. Cotton arrivals are
stable at 2.25 lakh bales and traders do not foresee any shortage. The
only factor that can throw markets off the gear is government policy. ”