According to federation sources, the cotton prices in the domestic market is showing a decreasing trend since January-end with all prominent varieties showing a fall of Rs 450 to Rs 650 per bale (170 kg), despite a projected fall in the production to 150 lakh bales during the current season as compared 156 lakh bales in 1999-2000.

The sources attribute the strange paradox to suppliers coming forward with longer credit to buyers, mainly the Indian mills. For mills, this has become a lucrative proposal which has resulted in booking more and more imported cotton. On the other hand, the textiles mills with sufficient money to buy cotton are asking for more discount for the domestic cotton against foreign one. Lower demand for Indian cotton, despite lower production of corresponding varieties of cotton abroad, has resulted in prices coming down almost daily.

The mills are creating panicky situation for buying cotton at any price in a short period. The prices will not be controllable and remain with speculative trade. The cotton growers do not have the means and resources to hold back the stocks.

The previous season (1999-2000) had opened with bearish trend, except the extra long staple, up to December 2000. There was a remarkable increase in the prices after banning imports from Pakistan. The last season closed with the average prices of most varieties of cotton, except DCH-32, being lower than the preceding season.

The prices in 2000-2001 started with firm trend. The rising trend in the international market and downsizing the domestic crop during the current season by the CAB had played a key role for upward movement of prices. While the extra long staple cotton like DCH-32 maintained a steady upward movement, most of the long and medium staple cotton moved in both directions.

In January 2001, the monthly average spot rates of DCH-32 was Rs 35,400 per candy (as compared to Rs 29,700 in the same period last year), that of S-6 Rs 21,800 (Rs 18,800), H-4 Rs 20,400 (Rs 17,300), J-34 SG Rs 17,900 (Rs 13,800). The average prices of LRA and Desi varieties in January 2001 were Rs 18,400 and Rs 10,500 respectively with that of the previous season not available. Australia is another major exporting country which was also exploring all avenues to enter India in what is considered to be a vast market. One could see how the Bangladesh market had been captured by imported cotton from developed countries, the sources added.