Most of the commodities are surging in trade on the back of the festival demand. However, the October rains do not augur well for the standing cotton crop.
Some mill buying has led to cotton prices coming off their all-time highs of around 51,000 per candy (one candy is equivalent to 356 kg) to around 32,000 but the rain might hit the movement.
It has been an erratic monsoon this time around. June-September monsoon ended with 6.5 percent of surplus rains. The market is still to gauge the impact from the October rains.
As per the latest IMD data, between the first and eighth of October, the country saw 43 percent excess rainfall on standing crop that is ready for harvest and the arrivals have started coming in.
In the International cotton markets, the US cotton acreage itself has seen quite a bit of an increase. Last year was around 11.2 million hectares, this time around is at around 13.79 million hectares.
International cotton prices have declined by yet another 2 percent. But the Indian market is trading 10-15 percent higher as compared to the international markets.
Traders and mills told CNBC-TV18 that the Diwali purchases and those for the B2B segments are almost done. "The traders are looking forward to the Christmas and the New Year textile demand at this point which isn't very strong," some sources said.
The only reason for the divergence, that is international prices declining but Indian prices gaining, is only because of the unseasonal rains.
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