MUMBAI, Nov 25 (Reuters) - Cotton futures in India, the world’s second-largest producer, are expected to fall this week due to subdued demand from local mills and exporters amid large supplies from the new season crop and on estimates of a record crop.
Cotton arrivals until Nov. 10 rose to 2.399 million bales of 170 kg each, from 2.023 million bales a year earlier, the state-run Cotton Corporation of India said in a statement on its website.
Daily supplies have increased and would gain further in the following weeks, spot traders said.
“Fresh export deals are almost negligible because demand is weak and fresh supplies are increasing every week. Cotton prices may fall further this week,” said Manu Mangaldas Shah, a trader from Ahmedabad, Gujarat.
The state-run Cotton Advisory Board estimated India’s cotton output at a record 37.5 million bales in the year, nearly 3 percent more than last year, despite planting on a smaller area and heavy rains in the top three producing states during harvesting.
The Cotton Association of India revised downward its production estimate for the 2013/14 crop to 38.05 million bales from an earlier 38.1 million bales, a statement from the association showed.
China, the world’s top cotton buyer, imported 3.37 million tonnes of the fibre in the first 10 months of this year, a drop of 21.7 percent on the same period last year, the association said, citing customs figures.
Imports have declined this year after textile mills ran out of import quotas and turned to importing yarn instead of the cotton raw material.
The December cotton contract ended 0.92 percent higher at 18,680 rupees per bale on the Multi Commodity Exchange after hitting a low of 18,430 rupees, a level last seen on May 30, 2013.
The December contract has fallen 14.82 percent between Aug. 28 and Nov. 25.
“Weak global markets may also add to the downside pressure. However, Prices may see some recovery in the later part of the week as demand might emerge at lower levels,” Angel Commodities said in a research note on Monday.
The most-active March cotton contract on ICE Futures U.S. rose 0.41 percent to 77.55 cents a lb at 1250 GMT, after falling to a 10-month low of Friday.
The pace of purchasing by China, the world’s top cotton buyer, has picked up, and the 2.65 million tonnes acquired by Friday is only slightly behind last year’s level at the same time, when the stockpiler had bought 2.85 million tonnes. (Reporting by Meenakshi Sharma; Editing by Sunil Nair)