Cotton On MCX Settled Up

Cotton on MCX settled up by 1.52% at 19310 due to pickup in demand from domestic mills in the spot market. Demonetisation has impacted cotton markets across the country. Lack of activity has resulted in empty pipelines, even as the demand remains hand to mouth. Sources have contracted export of 2 million bales for delivery between Nov-Jan, of which 1.3 million to be delivered by December. 

However, only 400,000 could be shipped until and about 1 million bales have been delayed due to shortage of supply. Further, mills have bagged orders for yarns until mid-January. So, both the commitments are to be met, which will explode demand for cotton with immediate effect. 

Meanwhile, the activity in the cotton yarn sector remains stunted, the weekly exports numbers show a revival. The government has already announced two months moratorium for loans up to Rs 10 million, the textile industry needs at least one year moratorium period for repayment of the dues and interest. Cotton output in 2016-17 is likely to rise by 3.8 per cent in from a year ago due to a sharp increase in yield following a favourable monsoon.

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