(Reuters) - Cotton prices in India are expected to edge lower this week on hopes the state-run Cotton Corporation of India (CCI) would offload stocks from its warehouses to augment supplies and as overseas prices are also under pressure.
The April cotton futures contract on the Multi Commodity Exchange (MCX) were down 0.42 percent at 18,800 rupees per bale of 170 kg each at 1013 GMT.
"Mills are cutting purchases. They have bought enough to cover immediate requirement. Now they are waiting for the Cotton Corporation's stock sale to build inventory for the lean supply season," said a Rajkot, Gujarat-based exporter.
Trade Minister Anand Sharma last month said CCI would release stocks in the open market.
Government agencies have procured between 2.5 million and 3 million bales and they would start releasing the stocks in April, according to industry and trade estimates.
New York cotton posted its largest one-day drop in two-and-a-half weeks on Friday, as weaker-than-expected U.S. government data prompted concern over the health of the world's largest economy and pressured commodities markets.
"Local prices are unlikely to fall sharply. Supplies from farmers are falling every day," the exporter said.
Cotton supplies to spot markets across India, the world's second largest producer, are at around 50,000 bales per day, down from 200,000 bales per day at the start of February, according to traders.
Cotton supplies from the beginning of the crop year in October 2012 to March 2013, were at 25.5 million bales, down from 25.9 million bales a year earlier, the CCI said.