Indian cotton prices face flux amid demand surge

Indian cotton prices are expected to hover between Rs 7,500-8,000 per quintal throughout March, April, and May, driven by various factors. The rate escalation for Saraki and cotton cake, with increases ranging from Rs 300-500 per quintal, adds to the production costs, potentially impacting the final market price. Heightened demand from international markets has led to the export of approximately 20 lakh bales, creating strain on domestic supply and influencing local prices.

The rise in demand for clothes and spindles, both domestically and internationally, further fuels the need for raw materials like cotton, affecting prices through supply-demand dynamics. Furthermore, the restrained stockpiling of cotton by local textile owners has increased their demand amidst the current market dynamics, potentially driving prices upward.

Considering the prevailing conditions, farmers are advised to adopt a phased approach to cotton sales. It is recommended to sell around 40 per cent of the cotton in March, followed by 30 per cent in April, and the remaining 30 per cent in May, if feasible, to optimize returns.

However, it's imperative to acknowledge the inherent risks in the market, such as unforeseen events like elections or shifts in market sentiments, which can influence cotton prices. Thus, decisions regarding cotton sales should be made after a thorough evaluation of these factors and individual circumstances.

In terms of supply and import dynamics, this year's estimated cotton production stands at approximately 260 lakh bales, supplemented by a carryover stock of about 60 lakh bales, indicating a decrease in availability compared to previous years. Moreover, importing cotton from other countries is expected to incur a 10 to 12 per cent higher cost this year, adding to the challenges faced by cotton producers.

In summary, the Indian cotton market presents a blend of opportunities and challenges. While factors like increased rates for Saraki and cotton cake, growing international demand, and rising demand for clothes and spindles may contribute to favorable prices, careful assessment of potential risks and informed decision-making regarding timing and volume of cotton sales are essential for effective navigation of the market.