The Cotton Corporation of India (CCI) has decided to put its plans to float a global tender for sale of cotton on the back burner. Instead, responding to the demand made by the country’s textile industry, the government agency has decided to release more cotton into the domestic market.
” We are in readiness for exports. However, we have decided not to go ahead with the plans for the global tender for cotton sale since the domestic market is picking up,” BK Mishra, CMD, CCI, told FE.
CCI has been placing 50,000 bales on a daily basis for the past 10 days on board for e-auction and around 80-90% of this has been picked up by mills, he said.
CCI has therefore decided to increase the quantity of cotton for sale on board to 75,000 bales a day. On Monday, of 75,000 bales placed for auction, buyers picked up around 61,000 bales. CCI has so far sold around 7 lakh bales in the domestic market.
According to Mishra, the global tender is likely to result in panic in the domestic market and could send out a wrong message. “CCI has been putting 50,000 bales a day for sale since the offtake has not been much. However, with the market picking up now, we shall increase the amount of cotton put up for sale,” he said.
Earlier, Mishra had said that CCI does not intend to offload huge stocks immediately, as it could worsen an already glut-like situation in the market and hurt realisations of farmers selling cotton. The agency is holding stocks worth around R16,000 crore now and has procured around 86.09 lakh bales. The agency has stopped procurement of cotton from farmers for the current season on account of prices moving up. Cotton prices have increased marginally by R50-100 per bale resulting in market prices of R4,100-4,150 per bale both in Gujarat and the South.
Mishra pointed out that the textile millers have been complaining that CCI has not been placing sufficient cotton up for sale and therfore decided to increase the quantity. Millers are now offering a better price of R100-300 more per bale than the prevailing market price, he said. The prevailing market price is around R32,000 per candy to R33,000 per candy.
The textile industry has been urging CCI to start releasing cotton into the market, to ease supply stating that the industry is passing through a serious situation due to non-availability of cotton in abundant quantity, on account of the stop-go policy of CCI, in spite of holding a high level of stock.
According to top officials of the Cotton Textiles Export Promotion Council (CTEPC), CCI has only released 0.3 million bales of its total procurement. “It is releasing a negligible quantity of between 3,000 and 5,000 bales a day which is resulting in a steep rise in prices, beside creating a shortage of good-quality cotton for the textile sector, which in turn is adversely affecting the export of yarn, fabrics and made-ups. CCI should start releasing at least 50,000 bales a day for 100 days, through e-auction,” RK Dalmia of CTEPC had said.
Southern India Mills’ Association has also urged the textiles minister Santosh Gangwar to direct CCI to immediately commence selling the commodity directly to the actual users by e-auction, with liberal credit norms.
Asked to comment on its export plans, Mishra said the agency is in readiness for exports but will focus on the domestic market for now due to upward movement in prices. “We have spoken with a number of buyers in Bangladesh who were keen on purchase of Indian cotton,” Mishra said adding that the agency is also in talks with buyers in Vietnam.