Short-term cotton prices may not increase. According to the rating agency, the arrival of new actions as well as the expected impact of the Omicron COVID-19 variant on demand should stop any further rise in cotton prices in the near term.
India Ratings and Research (Ind-Ra) said cotton prices should be corrected in the short term, due to the increase in new entrants as well as the spread of the Omicron variant which is said to impact demand.
Until recently, healthy international and domestic demand as well as minimal opening stock have supported high prices.
“The continued rise in domestic cotton prices in November 2021 was driven by increased international and domestic demand as well as minimal opening stock, despite new cotton arrivals and zero purchases by the Cotton Corporation of India.” , the agency said in a report.
As a result, prices for ‘Shankar-6’ (base average) increased 14% month-on-month (MoM) and remained 55% higher year-on-year (YoY) due to strong demand and l lower base effect.
“Prices in China also increased in November 2021 due to a year-over-year decline in cotton production for the current season, resulting in a supply shortage amid high demand. “
Additionally, Ind-Ra expects inventory levels to decline by the end of the current cotton season with lower opening stock and slightly higher consumption.
“Additional levels of consumption are likely during the current season against a marginal increase in production, thus reducing the final stock expected according to the USDA-FAS.”
“Likewise, the national stock-to-use ratio is expected to decline during the new cotton season.”
In addition, Ind-Ra expects the prices of “cotton yarn” and “waste yarn” to continue to increase in the near term, due to higher demand from downstream players as well as from suppliers. export markets.
(With IANS inputs)
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Posted on: Saturday January 08, 2022 13:11 IST