PUNE: Cotton prices in the spot market have increased 2.5% in a week, a development that traders attributed in part to widespread belief that the output for 2017-18 would be less than 370 lakh bales although the Cotton Advisory Board has forecast 377 lakh bales in its first estimate.

Traders said that this combined with the main trigger of Pakistan’s decision to allow import of Indian cotton resulted in price rise of Rs 1,000 per candy to Rs 39,500 per candy.

Explaining the rationale for the forecast, Cotton Advisory Board chairman Kavita Gupta said, “We believe that 19% increase in area under cotton could compensate to some extent the losses that could be suffered due to pink bollworm problem, which has been mainly noticed in five states of the country.”

The area under cotton has increased to 122 lakh hectares from 108 lakh hectares in the previous year. The board has forecast 9.3% higher output than the production of 345 lakh bales in 2016-17. However, traders peg the output this year at 355-365 lakh bales.

Cotton harvest continues for several months as the crop yields multiple pickings. As per trade estimates, about 100 lakh bales of cotton have come to the market so far, indicating that a large crop remains to be harvested.

The Cotton Association of India, which mainly represents cotton traders, had earlier said that it estimated cotton production of 375 lakh bales for the 2017-18 season.