Maharashtra Federation cuts procurement rates by Rs 2,000 per cotton candy

Aarti Shetty

Mumbai, Oct 14: The Maharashtra State Cooperative Cotton Growers Marketing Federation Ltd (Maharashtra Federation) has slashed its cotton procurement rates for traders by around Rs 2,000-2,200 per candy to around Rs 18,100 per candy for the H4, H6, MECH4 and MECH1 varieties. This reduction in prices has happened in phases for the past one month.

The Maharashtra Federation is the only authorised body in the state which buys cotton from farmers and sells it to the traders and mills. The Federation has its fixed price list to sell cotton to traders. The cut in prices is a move by the Federation to make domestic cotton more price competitive in a scenario where cotton prices are falling both domestically as well as internationally.

Since October, cotton prices have witnessed a downward trend. For instance, one candy of the Bengal Deshi variety of cotton was costing Rs 14,089 on Oct 2, which declined by almost Rs 850 to cost Rs 13,232 per candy currently. Similarly, one candy of J34 was costing Rs 16,707 on Oct 2, which fell by nearly Rs 1,000 to be quoted around Rs 15,708 per candy currently.

“This year the domestic cotton crop is estimated to be good in terms of yield and quality and due to good cotton crop arrivals in the market, there is a fall in domestic cotton prices”, says Sanjay Trading Company’s partner, Brijesh Sampat. According to him, there is increased pressure on domestic cotton prices as globally too, cotton prices are seen to be sliding.

The same can be witnessed on the New York Cotton Exchange (NYCE). On Oct 1, the NYCE opened at 33.30 cents per lb, for the October deliveries which consequently fell to 31.00 cents per lb on Oct 12. On Oct 13, the December futures were quoted at 32.01 cents from 33.27 cents on Oct 5, indicating a fall of 126 pts for the week and a fall of 16 pts for the day.

Similarly, March 02 and May 02 contracts were also quoted low at 33.47 cents and 34.70 cents respectively on Oct 13, from the previous Oct 5 close of 35.28 cents and 36.57 cents. The downslide in global cotton prices is due to the slowdown in international markets.