Cotton prices surge 16% in eight days

With each passing day, raw cotton prices in India are creating new milestones and the pace with which it has increased in the last few days as left everyone across the cotton textile value chain breathless, except the farmers who are laughing all the way to the bank.

Yesterday, raw cotton prices of the Shankar – 6 variety in the Gujarat market were hovering between Rs 57000-58,000 per candy (One candy = 356 kg) against Rs 50,000-50,500 per candy on February 1. In effect, in a space of eight working days, prices have shot up by a staggering 16 percent and also are more than double the prices prevailing at the same time last year.

Within the first week of the new Indian cotton market year 2010-11, prices opened with a big bang. On October 4, 2010, Shankar - 6 quality was quoted at Rs 38,000 per candy, against just Rs 22,800 per candy on the same day in 2009, up by more than an astounding 66 percent.

The cotton farmers who had been at the receiving end all these years due to unremunerative prices, are upping the ante, by holding on to their produce, which in turn is further fuelling a already bullish market, as buyers who include spinners and exporters are becoming more frantic, to corner stocks, before prices become more dearer.

Experts are attributing the surge in prices to the demand from exporters who are supposed to physically ship the quota allotted to them by February 25 as per the directions of the Commerce Ministry. However, these rising prices have upset the calculations of these exporters, who had booked orders in late December or early January at a time when prices were lower.