"Demand from Bangladesh emerged last week as factories there are ramping up production to meet expected rise in orders from Europe and the United States during approaching Christmas and New year holidays," said Arunbhai Dalal, a trader based in Ahmedabad, Gujarat, India's largest cotton growing state. Indian exporters have signed contracts for shipping nearly 1 million bales, mostly to neighbouring Bangladesh, in November.
Higher demand for cotton from Bangladesh, the world's second-largest exporter of apparels, amid aggressive buying by yarn makers could offset the surge in the fibre supplies and keep prices range bound for some time, Dalal said. Many farmers are holding on to their produce in the hope of better returns and this has given some support to prices so far, traders said.
Yarn export registrations more than doubled in October from corresponding period last year. Buying by yarn makers to meet overseas demand prevented prices from falling in November and this could also support prices, traders said. In New York, the key March contract was trading down 0.61 percent at 73.53 cents per lb at 1154 GMT, after hitting a six-week high at 74 cents per lb in the previous session.
On Monday, the most-traded domestic spot Shankar-6 variety fell 100 rupees to close at 33,400 rupees per candy of 356 kg (around 78 cents per lb), data from the Cotton Association of India showed. Spot market prices are available in the evening. The January cotton futures contract on the Multi Commodity Exchange (MCX) closed down 0.55 percent at 16,330 rupees per bale (around 80 cents per lb) on Tuesday. Cotton futures started trading on MCX in late 2011, but volumes have been thin and prices volatile.