MUMBAI: Cotton prices in India are likely to remain range-bound this week as lower buying by yarn makers and a fall in prices in the overseas markets are expected to offset the tight supply situation in spot markets.
On Monday, the most-traded Shankar-6 variety fell 300 rupees to 38,200 rupees per candy of 356 kg, data from the Cotton Association of India showed.
At 1036 GMT, the key August cotton contract on the Multi Commodity Exchange (MCX) was trading up 0.62 percent at 17,860 rupees per bale of 170 kg on Tuesday.
"Mills have slowed down purchase, prices have declined in overseas markets, there is nothing in market which could push prices up," said Bharatbhai Patel, a trader based in Rajkot, in the western state of Gujarat.
Tight domestic supplies of the fibre and lower prices in the overseas markets have prompted some textile mills to ramp up imports. However, traders are confident that the imports will not have much impact on prices.
New York Cotton futures sank nearly 2 percent on Monday as the United States raised its estimate for global inventory for the marketing season which ends next July by 3 percent to record high, cementing fears of growing global surplus amid slowing demand.
Fears of lower availability of the fibre in the next season, as scanty rains in key growing areas curb sowing in top producing Gujarat state amid a tight supply situation, are preventing prices from falling despite low demand, Patel said.
Most farmers in India plant cotton in the months of June and July with the arrival of the monsoon season and begin harvesting after October.
India's cotton crop year runs from October to September.
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