Cotton prices in India are expected to fall this week as traders may book profit after recent gains and on the good progress of the monsoon, though dwindling supplies are seen restricting the downside. Rains have covered the entire country a month ahead of schedule, aiding sowing operations. Farmers have started sowing cotton, and the good progress of rains is seen accelerating sowing operations and improving the yield, traders said.
"Profit-taking is expected in cotton futures this week. The June contract may fall to 18,700 rupees," said Chowda Reddy, a senior analyst at JRG Wealth Management. The June cotton futures contract ended up 0.58 percent at 19,130 rupees per bale of 170 kg each on the Multi Commodity Exchange. It has risen more than 4 percent since the close on May 22. The area under cotton cultivation will not fall much as was expected because rains have accelerated sowing operations in most cotton-cultivating states, said Arun Kumar Dalal, a trader from Ahmedabad in Gujarat.
Dalal said sowing is good in Andhra Pradesh but it may drop in Maharashtra and Rajasthan because of competition from soybeans and guar. Sales from government reserves were also seen weighing on sentiment. The Cotton Corporation of India offered to auction 54,600 bales on Tuesday, according to a notification on its website. Daily supplies in local markets have declined to 20,000-25,000 bales as the season has come to an end and farmers are busy with planting.