Mumbai - After accumulating sharp gains in the previous session, cotton traded marginally down amid speculative selling during initial hours of trade on both the domestic exchanges Wednesday. While NCDEX April cotton slipped Rs 1.90/20kg, MCX April cotton dropped Rs 1.40/20kg. The futures had gained sharply yesterday on strong support from the reports of possible improvement in buying and firm prices in the spot markets.

At the spot markets Tuesday, cotton lint traded steady amid demand from millers and normal arrivals across north India. Around 8,000 bales of kapas arrived in the entire northern region today while 3,000 bales were traded by the afternoon. Nahar, Wardhamaan and Setia mills are the prominent buyers in the market.

Traders say, unsold stock of cotton lint is stable as all the quantity that arrives in the market is sold by the evening everyday. As of now, the unsold stock in the entire northern region is of three lakh bales of cotton. A Bathinda-based trader says, there are no signs of decline in cotton lint prices in the near future as arrivals are reducing while millers are consistently buying from the market.

Across western India, cotton lint traded steady after witnessing heavy volatility in last few days. Traders believe that the undertone of the market is strong and that buying will improve very soon.

Jasdan-based trader Bharatbhai Popat says, the market is not having pressure of unsold stock as ginners have cleared enough stock during the recent rally. Following this, the cash position of ginners has become strong and therefore they may wait for good price to liquidate the remaining stocks.

Popat says, indications are that buying will resume very soon as multi-national trading companies and other buyers also have to make enough purchasing. He says, around 10 per cent kapas is yet to arrive in Gujarat markets, but farmers are not in a haste to sell the crop expecting surge in prices.

Earlier, ICE Futures US cotton settled up the exchange-imposed limit Tuesday in speculator-dominated trade, mostly setting aside a bearish government report, analysts said. May futures settled 400 points higher at 81.28 cents a pound and July cotton also ended up 400 points at 83.11 cents.

At 10.31 am IST, NCDEX benchmark April cotton slipped Rs 1.90 to trade at Rs 538.00/20kg, after witnessing movement between Rs 534.80 and 542.40/20kg. Open interest in April cotton was 3,916 lots. Trading in NCDEX March cotton had not begun till the filing of this report. Open interest in March cotton was 84 lots.

MCX April-08 contract was trading down Rs 1.40 at Rs 495.00/20kg.