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Cotton prices in India are 20 percent higher than global rates.

Raw materials market Textiles and Сomposites
A strange trend is seen in India which is the second-largest producer of cotton in the world. It has surplus cotton but the prices quoted globally and in the domestic market are much higher than the global cotton rates.

The Indian spinners are at a loss on how to procure cotton at higher than international rates. The mills are worried at current cotton rates they would not be able to sell their yarn both in domestic and international markets. Some cotton traders allege that farmers have held back their produce. Cotton traders allege farmers are holding back produce and are releasing the stocks slowly to maintain higher rates.

In fact, the farmers that harvested bumper crops last year were dismayed that as soon as they parted with their crop the cotton prices doubled. Last year many farmers built silos to stock the raw cotton. They are taking advantage of the investment they made last year. This year the cotton rates earlier were very high in the global market but now have sobered. The corresponding decline has not been witnessed in the Indian domestic market.

The prevailing cotton rate in the agricultural produce marketing committee (APMC) yard in Gujarat, is INR8700-8800 a quintal. These rates are 20 percent higher than current global cotton rates. The arrivals are slow. Experts fear that cotton consumption may decline this year because of higher cotton rates.

For the Shankar-6 cotton, the price quoted for exports the benchmark is INR67500 a candy. In New York, cotton is quoted at 79.69 US cents a pound which is equal to INR52150/candy for delivery in March. On Indian mercantile exchange cotton for delivery in December is quoted at INR31.310 per kg which comes to INR65,566/candy.

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