Cotton prices have moved up and the market sentiment has improved with the Cotton Corporation of India (CCI) resorting to purchase of the commodity at commercial rates from different parts of key cotton growing regions in the country.
According to top officials of CCI, prices have now firmed up to R41,500 per candy from the prevailing rates of R38,000 and farmers are now beginning to get better rates from traders.
International rates are currently at R42,000 per candy. CCO has stepped in to protect the interests of farmers and industry, M M Chokhalingam, CMD (in-charge) said.
CCI has purchased 10,000 bales so far and for the last couple of days has been going slow on purchases because rates have improved, he said. This is the first time after a gap of four years that CCI has stepped in to make commercial purchases.
Chokalingam said the Corporation will step in aggressively if the market rates slip down and it shall remain for the entire season. The Corporation expects to purchase around 15 lakh bales for the season of 2016-17.
In the start of the season, cotton prices were ruling between R5,000 and R5,200 per quintal in various markets while Minimum Support Price (MSP) was at R4,160 per quintal.
However, prices dropped down later because of which the CCI intervention helped, he said.
Chokhalingam pointed out that CCI now uses the e-purchase and e-sale modes for sale and purchase of cotton and therefore had called for bids through e-auction.
Apart from MSP operations, CCI also has to perform commercial operations at times in the interests of the farmers and to keep the market stable. If CCI does not have stocks then traders can control markets and bring out cotton during lean season,” he explained.
“The intent of the CCI is to ensure that this does not happen and keep prices uniform. Instead, CCI will purchase some 15-20 lakh bales of kapas and make it available to the industry in times of need,” he said.
CCI has been purchasing kapas or raw cotton from markets wherever the prices are lower, Chockalingam said, adding that the commercial purchase of up to 15 lakh bales would be mainly from the west, central and southern parts of the country as prices in the northern markets are ruling much higher.
Meanwhile, the Maharashtra State Cooperative Cotton Growers Federation has urged both the state and the Centre seeking permission to purchase cotton from farmers at commercial rates.
We are usually the sub-agents for CCI and have been purchasing cotton at MSP rates but this time the prices are higher and therefore we would like to purchase at market rates, N P Hirani, chairman of the federation said.
Chokhalingam said that the Corporation has authorised the federation to make purchases. It is only private groups that have been told to register as buyers or sellers, he clarified.
The Centre had declared an MSP of R4,160 per quintal for the current season for the long staple fibre and R3,860 for the medium staple length. Besides protecting cotton growers’ interests, CCI caters to the needs of its customers, such as the National Textiles Corporation and several co-operative mills. It also meets the demand of private sector mills, mainly during the lean season, by releasing the fibre from its stocks.
Over the last three-four years, CCI has stepped into the markets to protect farmers when prices fell below the minimum support price (MSP) levels. Although Indian cotton acreage had dropped by close to a tenth this year to around 110 lakh hectares higher yields, on account of widespread rains in key producing states, it is expected to help maintain output.