Pradeep Jain, president, Khandesh Cotton Ginners Association, Jalgaon, said the moisture content in cotton was more than 30% in new cotton.
Government-run Cotton Corporation of India (CCI) is all prepared to purchase as many as 100 lakh bales of the fibre from farmers during 2019-20 cotton season after Diwali. CCI chairman and managing director Alli Rani said the fibre prices were expected to fall after Diwali when arrivals pick up. Currently, arrivals were negligible and did not meet the quality parameters of the agency of 12% moisture, she said.
Pradeep Jain, president, Khandesh Cotton Ginners Association, Jalgaon, said the moisture content in cotton was more than 30% in new cotton. Old cotton from the previous season is commanding prices as much as Rs 6,000 per quintal and new cotton with high-moisture is at Rs 3,200-Rs 4,500 per quintal.
CCI buys cotton from farmers whenever prices fall below the minimum buying price set by the government. Alli Rani said CCI would make the Minimum Support Price (MSP) purchase if cotton prices fall below the support price. Prices are above the MSP at Rs 5,900 per quintal in North India, where fresh crop has started arriving. The MSP of cotton for the 2019-20 season is Rs 5,550 per quintal, against Rs 5,450 in the previous year.
Arrivals had begun in Madhya Pradesh but the moisture content was high, so CCI would not be able to make purchases, she said. “We are prepared to buy even today but the moisture content levels are high. CCI may have to intervene in the market in November. CCI has established 358 procurement centres this year. If required, we can open more centres.”
Right now, the biggest concern among traders is whether the CCI will enter the market. Jain said that traders were offering farmers Rs 4,800-Rs 5,200 per quintal and although CCI may offer MSP at Rs 5,550 per quintal, traders offer cash on the spot while a lot of documentation is required for the MSP sale. The money is credited to farmer accounts after eight days, he said.
According to Alli Rani, the highest procurement by CCI so far has been in 2014-15 when the agency had procured around 96 lakh bales. “The following years have been no MSP years and last season as well, prices have been 28% higher than MSP. Everyone said that procurement would be required but nothing happened. CCI purchased barely 10 lakh bales during that season.”
Rani said India’s cotton production in 2019-20 (Oct-Sep) was likely to be at least 350 lakh bales, up nearly 4% from the previous year due to higher acreage and better weather conditions in most of the growing regions. In the last few years, India’s cotton output has averaged 350 lakh bales.