The drop was more pronounced for long staple varieties like DCH-32 which came down heavily by Rs 141 to Rs 8,295 per quintal and H-4 by Rs 84 to Rs 5,765 per quintal. Shankar-4, however, registered just a modest fall of Rs 12 to Rs 6,018 per quintal.

According to Hemant Mulky of East India Cotton Association, the current price fall indicates slack in demand for cotton while there may be adequate stocks ready for sale in the market. Despite lower cotton production in the current season, it appears that lower arrivals do not seem to have affected the availability vis-a-vis prevailing demand pattern.

With this alround fall in raw cotton prices, the uptrend witnessed during March and early April has been reversed belying the hope of firm cottonprices at this fag-end of new crop arrivals. The spinners who face sluggish demand for their cotton yarn by weavers find raw cotton too costly which has led to low offtake lately.

The demand for fabric is slack also because grey cotton fabric exports have suffered after the anti-dumping proceedings against Indian exporters.

Thus, there has been a cascading effect of poor demand for fabric onto raw cotton. Generally Punjab cotton crop being lower, these varieties react sharply than Gujarat varieties whose production is higher and availability too has eased. Depending upon the stock position, cotton prices often exhibit mixed trend.

According to the market sources, Bengal deshi show frequent changes but can not be considered trend setter since other varieties do not follow it. Bengal deshi is used more for the purpose of blending for coarse fabrics like denim whereas J-34, H-4 etc go directly in to spinning yarn used for fabric.

The East India Cotton Association undertook a study of the average pricesduring the first six months of this season which shows that they have been 10 to 24 per cent higher compared to the averages during the corresponding period of last season. The maximum increase has been in the case of J-34 and DCH-32. However, when compared to the six-monthly average prices in 1995-96, there is a mixed trend. While the average prices of J-34 and S-6 this year are higher by 16 per cent and 3 per cent respectively compared to 1995-96 averages, they are lower by five per cent and seven per cent in the case of H-4 and DCH-32.

It was also noticed that the average prices of all other varieties except Shankar 6 were somewhat lower during March as compared to February 1998.