Jan 16 (Reuters) - Cotton prices in India, the world's second-largest producer, are expected to rise next week on a likely rise in export demand from neighbouring Bangladesh and Pakistan, after remaining steady this week on buying by state-run agencies.
"Exporters are getting good number of queries from Bangladesh and Pakistan. Both countries are ramping up yarn productions," said Dhirenbhai Khaitan, a trader based in Rajkot, Gujarat.
Fibre prices in local markets steadied on buying by state-run Cotton Corporation of India, who had already purchased more than 1.3 million bales of 170 kg each from farmers at pre-agreed rates. And traders expect the government to buy additional 7 million bales that could outweigh rising supplies in spot markets.
According to traders, cotton supplies in spot markets across the country have risen to 240,000-250,000 bales per day from 200,000 bales per day earlier this month though overall cotton supplies in spot markets in the current marketing year that begin on Oct. 1 are still 6.2 percent lower than previous year.
Demand for Indian cotton from Bangladesh and Pakistan are likely to rise as yarn makers in these countries are ramping up production to meet higher import orders from China where textile mills are looking to blend cheaper imported yarn with cotton stocks bought at higher prices to make more competitive end-products.
However, low demand for raw cotton from China, the world's largest textile maker and biggest buyer of the Indian fibre, could limit the uptrend in the prices.
China has cut down on the fibre's imports as it is sitting on huge stocks.
Global cotton prices are under pressure as an ongoing economic slowdown in Europe and the United States, has reduced consumer demand for textile products, while cotton output has risen.
In New York, the key March contract on the Intercontinental Exchange was up 0.29 percent at 76.43 cents per lb at 0930 GMT.
On Tuesday, the most-traded domestic spot Shankar-6 variety closed flat at 33,400 rupees per candy of 356 kg (around 77 cents per lb), data from the Cotton Association of India showed. Spot market prices are available in the evening.
The January cotton futures contract on the Multi Commodity Exchange (MCX) was trading up 0.18 percent at 16,340 rupees ($300) per bale (about 80 cents per lb) on Wednesday. ($1 = 55.2550 rupees)
