Trading Grinds to a Halt in Indian Markets

By Jim.Robinson|May 10, 2011

There has been no trading in the Indian cotton market since Friday, May 6th which has resulted in a serious decline in cotton prices.

There is literally a complete lack of buying, according to K. N. Viswanathan, honorary secretary of The South India Cotton Association in Coimbatore, India. Viswanathan told Cotton International that there are several factors causing this price crash:
• overstocking of cotton in anticipation of higher prices on speculative basis and lack of buying upstream
• processing house closures in Tiruppur area of South India
• the spinning industry is facing serious power shortages
• cotton spinners are facing uphill battle in selling yarn to weaving units

Sankar-6, the benchmark cotton, traded last Friday at $2.76/kg. It is now at $2.58, with no takers. India is 24/7 market but no trading has occurred since last Friday, Viswanathan said.

Both Viswanathan and India’s Cotton Advisory Board have estimated India’s production to be 31.2 million bales (170 kg), with Viswanathan providing a range of 30.5 million and 31.2 million bales. From the beginning of this season until May 1, India has produced 28.7 million bales. Viswanathan expects the daily arrivals to total 45,000 bales per day for the next 30-35 days.