Cotton prices hit record Rs 55,500 per candy in Gujarat

Ahmedabad, Feb 9 (PTI) Cotton prices in Gujarat surged to a record high of Rs 55,500 per candy (356 kg) today, a Cotton Corporation of India (CCI) official said here.
"Prices of the benchmark Shankar-6 variety of cotton are ruling between Rs 55,500 to 56,000 per candy in the spot markets here, as the mill consumption has gone up and supply is low," a CCI official said.
The widening gap between demand and supply has fuelled the prices, he said.
"In the wake of a worldwide shortage, cotton imports from countries like China, Pakistan, Uzbekistan and US are not viable, as the price difference is anything between 15,000 to 16,000 per candy compared to domestic prices," a CCI official said.
"The revised cotton production in Gujarat during the 2010-11 season (October-September) is pegged close to 1.03 crore bales (170 kg) against preliminary estimates of 1.10 crore bales," he said.
Anticipating brisk demand for cotton from mill owners, the CCI has purchased around 2 lakh bales of the white commodity in Gujarat so far.
The CCI has pegged cotton consumption by mills in India in 2010-11 at close to 255 million bales.
"The escalating prices of cotton have broken all price records in the last 200 years. The price has touched a lifetime high of Rs 56,000 per candy. The way cotton prices have risen by over Rs 15,000 per candy since January, it seems some speculator lobby has entered into the market," Gujarat State Cooperative Cotton Federation (GSCCF) Managing Director N M Sharma said.
According to Sharma, only 55 lakh bales of cotton have been registered for exports with the Director General Foreign Trade after the allocation of a 19 lakh bales quota for exports by the government.
"Taking into account exports of 55 lakh bales from the country, around 65 lakh bales are still available for domestic mill consumption so there is no shortage as such," Sharma said.
The government should intervene, otherwise genuine stakeholders will suffer badly, he said.
The prices of Shankar-6 were ruling at Rs 28,000 to Rs 30,000 per candy in Gujarat between January and February last year, industry sources said.

(Source: http://news.in.msn.com/business/article.aspx?cp-documentid=4901207)