Cotton Corporation of India may need to procure much less as prices likely to rule above MSP

By: |
August 20, 2021 5:45 AM

As against 92 lakh bales that was procured in the 2020-21 season, the CCI may not be required to procure more than 30 lakh bales for the new season, Pradeep Kumar Agarwal, CMD of the CCI, told FE.

The new season may begin with an opening stock of 60-70 lakh bales.The new season may begin with an opening stock of 60-70 lakh bales.

The Cotton Corporation of India (CCI) may be required to procure minimal amount of cotton in the 2021-22 season, as kapas prices are likely to rule above the minimum support prices (MSP) for a better part of the season. Procurement may be required during the peak season when prices drop below the MSP, top officials of the corporation said.

As against 92 lakh bales that was procured in the 2020-21 season, the CCI may not be required to procure more than 30 lakh bales for the new season, Pradeep Kumar Agarwal, CMD of the CCI, told FE. Strong demand for cotton and depleting stocks, in addition to 10% import duty levied on cotton, have caused prices to rise to Rs 6,500-7,000/quintal at the start of the season.

Although the area under coverage has gone down by 6-8%, from 133 lakh hectares last year to 125 lakh hectares in the current season, cotton production will still be high because of good rains and may touch 350-360 lakh bales. As per CCPC data, the 2020-21 season began with an opening stock of 120 lakh bales and the crop size was 371 lakh bales with 11 lakh bales of imports, leading to a total supply of 502 lakh bales. The new season may begin with an opening stock of 60-70 lakh bales.

“CCI will be present in the market to ensure that the farmer does not sell in distress. Intervention may be required only during the peak season in December when arrivals are high and prices may fall below MSP. The CCI may then be required to intervene for a short period of 15-20 days, especially in far flung rural areas where there are no buyers,” Agarwal said.

The procurement may not go above 30 lakh bales. Meanwhile, cotton arrivals have begun in the north in a small way, with 800-2,000 bales being brought to the market on a daily basis and these are not meeting the quality parameters of the corporation, the CCI chief said. “Significantly, this season along with kapas prices, cotton seed prices are also ruling high and promise good returns to farmers. Seed prices have gone up to Rs 4,500-5,000 per quintal as against Rs 2,500 a year ago,” he said.

Meanwhile, the US Department of Agriculture has forecast India’s cotton production at 29 million bales (480-pound), which is unchanged from last month and up by 2% from last year. Area harvested is forecast at 12.9 million hectares, down marginally from last month and last year due to the slow progress or pause in the southwest monsoon and competition with other crops.

According to the India Department of Agriculture’s all India crop situation report dated August 6, planting progress in the central region, which comprises 75% of total production, is down nearly 5% from the same period last year. Northern India completed sowing cotton in May. Planting in central India should be completed in August. Planting activities have started in the southern region.

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