P Alli Rani, chairman-cum-managing director of CCI, confirmed the development, stating the government agency had sold around 10,000 bales at a price of Rs 47,000 per candy through e-auctions in Maharashtra and Telangana.
The Cotton Corporation of India (CCI) has commenced the sale of cotton procured by the agency in the current marketing season under the government’s Minimum Support Price (MSP) procurement programme. P Alli Rani, chairman-cum-managing director of CCI, confirmed the development, stating the government agency had sold around 10,000 bales at a price of Rs 47,000 per candy through e-auctions in Maharashtra and Telangana. “I do not think CCI would be required to intervene and purchase at MSP since farmers are getting prices from traders,” she said.
Since early March, cotton prices have strengthened by Rs 3,000 a candy (of 356 kg each) to Rs 44,500 now. Spot prices have increased from Rs 45,000 to Rs 45,500 per candy. After the 26% year-on-year increase in 2018-19, the MSP for medium-staple variety of cotton is at Rs 5,150 per quintal, and that for the long-staple variety is at Rs 5,450 per quintal. After conversion, the MSP equivalent price comes at Rs 41,000-Rs 42,000 per candy. Nearly 70% of the cotton has arrived in the market so far, and with the peak period about to get over, the season is likely to stretch for another couple of months, she said. According to CCI, about 235 lakh bales (of 170 kg each) cotton have arrived in the market as on March 15. The Cotton Association of India (CAI), in its March 2019 estimate, has pegged the crop output this year at 328 lakh bales.
The CAI has procured around 11.60 lakh bales so far, nearly four times the amount collected in the same period previous year. The marketing season started in October 1, 2018. CCI has also begun purchasing cotton from the open market on its commercial account, amid bullish price indications due to falling supplies. Until now, 7,000-8,000 bales of cotton have been purchased on commercial accounts in Karnataka, Maharashtra and in the northern states. Around 235 lakh cotton bales have arrived in the market as on March 15. The CCI has introduced stricter quality norms this season for ginning and processing units in cotton-producing states.
According to the CAI crop committee’s last meeting on March 1, the committee has estimated a crop size of 328 lakh bales of 170 kg each, against an earlier estimation of 330 lakh bales. Last year, the crop yield stood at 365 lakh bales, which implies India will have yield less by 37 lakh bales this season as compared to the previous one. The current opening stock is 28 lakh bales and the arrivals stand at 213.42 lakh bales till February 28. The import has been around 5.50 lakh bales till February 28, which means the available crop is 246.92 lakh bales. The consumption has been around 131.66 lakh bales from January 10, to February 28.
CCI initially conducted MSP procurement operations to arrest a fall in prices due to increased arrivals. However, after buying about 12 lakh bales, CCI has reportedly stopped procurement as the market price of raw cotton or kapas gained 10 % above MSP at Rs 5,850-5,900 a quintal. The MSP for cotton was fixed at Rs 5,450 a quintal. Daily arrivals have declined to about 80,000-90,000 bales as against what used to be at 1.3 lakh bales last year. Nearly 90 lakh bales of the fibre is lying in stocks, of which mills have about 45 lakh bales, while the remaining is with corporates, CCI, and MCX. CAI estimates put export shipments at 50 lakh bales for the season ending September.