June 7: There is a bit of good news for cotton exporters who have been facing poor prospects of selling Indian cotton abroad because of unremunerative prices there. The news that New York futures climbed to 73-75 cents per pound from 61-62 cents per pound over a month as also spot cotton in London picked up substantially instills hopes for higher exports from India.Raw cotton prices rose sharply in London leading to only limited new business in the market. Australian strict middling variety rose by 3 cents per pound to 78. 50 cents per pound early last week. There was a similar rise in US Orlando/Texas middling by 3 cents to 77 and in US Memphis middling by 3.50 cents to 80.50. African franc zone strict middling and Sudan barakat both rose by only 0.50 cents to 68 and 85 cents respectively.The rise in New York futures prices was mainly due to the concern over the weather outlook in Texas, where cotton growing areas are reeling under scorching heat and badly need rains in order to plant the crop for thenext season. Europe, Greece and Turkey had adverse weather conditions with floods damaging crops. Approximately 5 per cent of the total cotton acreage has suffered complete loss and further 10 per cent of the acreage needs replanting.The cotton markets in London and New York have been moving up on massive speculative buying and a lot of short covering. Some commodity funds, amid unexpectedly sharp gains, brought to cover short positions. However, the hedging and speculative liquidation drove futures down by early last week signalling the end of a strong bull market.Some commodity funds who rolled over short positions last month from the May contract to July which they got in at 65 cents should have got out above 70 cent.But they did not and now they are trying aggressively to cover them. This seems to have exerted some downward pressure and the cotton futures on the New York Cotton Exchange settled slightly lower - by about half a cent because of mostly technical selling.According to US cottonanalysts, there is no fundamental justification for the market to be so high since outside the US there is plenty of cotton and supplies are ample. This gives a good opportunity for Indian cotton exports.
