In India, prices have skyrocketed mainly since the quality of cotton has been affected by heavy rains during September and November. “The problem is that the RD value of the fiber has been affected,” said Poppet. The RD value indicates how bright or dull the cotton fiber will appear.
Indian cotton prices are trading at an all-time high. It has been a very strong year for cotton prices, and the global markets are trading at a 10-year high as well Cotton prices in India have increased by 64%, while global prices have increased by nearly 45%. Prices have surged because of lower production not just in India, but in various other major producer countries as well.
There are supply constraints from the top producers and there is also an ongoing supply chain constraint, so the export numbers have continued to decline as well. There is rising demand from the textile industry, and with the economy continuing to open, it has kept cotton prices on the higher side.
In the Indian markets, we are looking at around 356 million bales of production this time around, which is slightly lower than the previous year. There are concerns here. Markets are dealing with an attack by bollworm pests from one side, and then there has been some surplus rain in other producing areas.
There are heat waves going on in UP right now that seem to be impacting the standing crop as well, so there has been a smaller planting area for crops this time around as well.
Everything appears to be adding up, and with cotton prices at an all-time high right now, the markets believe that there is more strength to come and that before the year is out, another 8 to 10% increase in cotton prices is what the Street is working with.
The spell of good fortune that saw Indian cotton growers celebrate a sparkling Diwali continues into the New Year, too.
Prices skyrocketed to a record of over 71,000 a candy on Monday, with farmers holding on to their products as the quality of arrivals has been affected by heavy rains during September and November last year.
