Cotton futures in India, the world's second-largest producer, are expected to trade higher this week on demand from overseas and local buyers amid a slowdown in supplies due to a cold wave in many parts of the country.
Indian origin cotton is getting good export orders from Pakistan and Bangladesh, while China is buying more of cotton yarn in a bid to bypass duties on the raw fibre, spot traders said.
"Demand for raw cotton has been good from Bangladesh and Pakistan, but supplies have slowed down in the local markets because of the dip in temperature," said Arun Kumar Dalal, a trader from Ahmedabad, a key market in Gujarat state.
Daily cotton supplies have fallen to 170,000-175,000 bales of 170 kg each from 180,000-190,000 the previous week across India due to the cold and cloudy weather, spot traders said.Meanwhile, Chinese buyers are settling cotton import contracts signed earlier to import more yarn from India to bypass duty.
"Chinese buyers are finding importing yarn cheaper than the fiber due to higher duty... Indians have willingly obliged as the deals were struck at much lower rates of 81-82 cents per pound, while current rates are 86-87 cents per pound," Kotak Commodities said in a research note.
The January cotton contract ended up 1.93 percent to close at 20,070 rupees per bale on the Multi Commodity Exchange.In the spot market, the price of the most-traded domestic spot Shankar-6 variety rose 300 rupees to 40,700 rupees per candy of 356 kg, data from the Cotton Association of India showed on Monday.However, estimates of higher output could limit the upside, analysts said.
Spot traders expect cotton prices to fall with the rise in supplies from mid-January.The most-active March cotton contract on ICE Futures U.S. was up 0.80 percent at 83.60 cents per pound at 1248 GMT. (Reporting by Meenakshi Sharma; Editing by Prateek
Source:- in.reuters.com/article
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