Cotton prices likely to drop, 21% increase in output.

Indian cotton output is expected to be 35.7 million bales as against the estimated 34.5 million bales, last year cotton product was about 29.5 million bales. Indian cotton output has increased by about 21 % compared to last year. The price of the cotton is likely to come down but this depends upon the government policy over cotton exports. The Indian government is likely to increase the export cap limit from the present 5.5 Million bales.

The government should also take necessary steps to stop speculative trading in cotton, like the Chinese government. The expected demand for the spinning mills in India is only about 26 - 27 Million bales of cotton. If the government plan for any increase in cotton exports or if it does not curb the speculative trading of cotton, then we may see literally no drop in cotton or yarn price further. All eye will be on the governments export policy review that is likely to be announced sometime beginning of next month.