After unprecedented hike in cotton prices, now there are enough chances that prices can fall below Rs. 30,000 a bale by the end of 2022.
Domestic cotton prices have lost about 18 per cent from their record highs of Rs. 50,330 a bale, while they fell 18 per cent in ICE futures and 11 per cent in India last week.
As per various reports, cotton prices have dropped by over 10 per cent across the country and over 20 per cent globally to a six-month low.
On the Intercontinental Exchange December futures is expected to drop to 80 cents a pound.
Experts believe that demand erosion, the firm US dollar outlook, global recessionary fears and a better crop outlook will lead to lower prices in the coming weeks and months.
The US economy is facing recessionary fears and the lockdown in China are also important factors to bring down the price. China accounts for 21 per cent of global imports.
The cotton export is also facing negative trend now as in the 2021-22 Crop Year, around 3.7-3.8 million bales were exported till May 2022, against 5.8 million bales exported in the year-ago period.
It is estimated that this year, India’s cotton exports may be limited to 4-4.2 million bales, against 7.5 million bales logged in 2020-21.
On the other hand, duty-free imports can provide relief to the extent of 15-16 lakh bales till September-end.
After the recent removal of duty so far, Indian traders and mills have bought 5 lakh bales of cotton. Overall, imports for 2021-22 now stand at 8 lakh bales. With the likely import of another 8 lakh bales till September-end, total imports for 2021-22 will be 1.6 million bales.
Source : https://in.apparelresources.com/