Cotton Corporation of India ( CCI), which was gearing up for procurement operations at Minimum Support Prices (MSP) from farmers may have to wait for a while as prices have gone above the MSP.
Cotton Corporation of India ( CCI), which was gearing up for procurement operations at Minimum Support Prices (MSP) from farmers may have to wait for a while as prices have gone above the MSP. Cotton prices are ruling at Rs 5,800 per quintal and have jumped up by nearly Rs 800 per quintal in last 10-12 days, according to traders.
Arvind Jain, president, Maharashtra Cotton Ginners Association said that prices have shot up by nearly Rs 800 per quintal on reports of short supplies, the typhoon in the US that has hit the crop and China announcing a quota of nearly 48 lakh bales.
“With old stocks depleting, there is a demand for new cotton and arrivals are slow due to rains in Haryana, Punjab and Madhya Pradesh where farmers could not harvest the crop and Maharashtra where the crop was hit due to lack of rains. This has led to a rise in prices,” he said.
“Moreover, the crop estimates have gone awry and now the output is expected to fall to some 3,240 lakh bales instead of the 365 lakh bales estimated earlier. Since traders are afraid of a shortage, they are picking up cotton early,” he said.
P Alli Rani, CMD, CCI pointed out that arrivals are weak, since this is the start of the season, to the tune of 50,000 to 60,000 bales a day. Moreover most of the cotton does not meet the FAQ parameters with more than 12% moisture. We have reports that the moisture content is 15%, 16% and even 17% as these are the first pickings, Rani said.
Meanwhile, industry experts pointed out that the traders are buying cotton at Rs 50 or Rs 100 more than MSP and once arrivals peak, prices are set to drop and then it will be difficult for them to buy at MSP.
Market sources pointed out that prices are up due to buying by mills, which are running out of stock amid lower-than-expected supply of the new crop in Maharashtra, Gujarat and Telangana.