The falling cotton prices in last few days have prompted Cotton Corporation of India (CCI) to gear up for procuring the fibre at the minimum support price (MSP) in Telangana, Karnataka, Maharashtra and Odisha.

BK Mishra, CCI MD, however, feels the market intervention by CCI may not be required since market prices may not fall beyond MSP.

Cotton prices are currently ruling at Rs 37,000-38,000 a candy (of 356 kg) against Rs 40,000 sold last week. The government had fixed a minimum support price (MSP) of Rs 35,000 a candy for long staple cotton and Rs 32,500 a candy for medium staple. Mishra says the market prices may not fall beyond suport prices.

CCI is ready to procure 50-60-70 lakh bales through MSP operations. In recent years, CCI did not go for a large-scale procurement to support prices. In 2012, it had purchased 22 lakh bales to provide support, mostly in Andhra Pradesh and Maharashtra. In 2008-09, it procured 90 lakh bales.The Centre is expected to issue a letter of comfort to CCI to enable easier lines of credit from banks. Mishra said the letter of comfort is in process. CCI has opened 300 centres for market intervention.

As per Indian Cotton Federation (ICF) estimates, Indian cotton production could reach above 400 lakh (40 million) bales in the 2014-15 season and overall acreage may jump 12-14% y-o-y as per the latest cotton sowing progress estimate of seed suppliers. India is expected to register a record harvest of 390-400 lakh bales, with the area under cotton crop touching 127 lakh hectares against 117 lakh hectares last year. Of this, around 300 lakh bales are consumed by the domestic market. India?s cotton exports have dipped to 90-100 lakh bales against 114 lakh bales last year. Normally, China imports around 120-130 lakh bales from India.

?The perception that there is a glut in the production of cotton in India is incorrect. The area has been increasing and last year as well the production was around 390 lakh bales. There has been a 5-10% rise in production. However, this year, China which is one of the largest importers of cotton has imposed restrictions as a result of which the market has turned bearish. This year, China has a glut in stock and has imposed restrictions on its own mills,? Mishra explained, terming this a cyclic situation.

Global prices have fallen 25% to a five-year low. The Chinese government has been insisting that local mills use more of home-grown cotton and, therefore, India?s exports have fallen, industry experts pointed out. Mishra said other markets are emerging such as Bangladesh, Indonesia and Vietnam, but these will take time to develop.

CCI and Nafed are the two government-appointed agencies to extend the necessary marketing support to the cotton growers in selling their cotton produce at most competitive prices in the various market yards in all cotton growing states through timely intervention. The corporation has 14 branches with 300 centres across major cotton growing States.