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  1. Cotton prices ruling high on subdued arrivals

Cotton prices ruling high on subdued arrivals

Cotton prices across the country are ruling high on subdued arrivals. The lack of demand in the apparels industry has also impacted arrivals and although farmers are getting high prices, they are preferring to hold back because of the currency shortage in the market, top industry officials said.

By: | Pune | Published: December 6, 2016 6:17 AM

Cotton prices across the country are ruling high on subdued arrivals. The lack of demand in the apparels industry has also impacted arrivals and although farmers are getting high prices, they are preferring to hold back because of the currency shortage in the market, top industry officials said.

Although the country has contracted some 6 lakh bales for export to countries including Bangladesh and Vietnam, traders are finding it difficult to meet contractual obligations because there is no kapas in the market, MM Chokalingam, Director, Marketing, Cotton Corporation of India (CCI) said.

“Prices are currently in the range of R5,200 per quintal while Minimum Support Prices are R4,160 per quintal. This is because some traders are still offering old currency notes to farmers. Some clarity will emerge by the month-end once the currency issue closes. Till then prices will continue to remain high,” he said.

According to him, cotton arrivals are presently in the range of 1.20 lakh bales across the country on a daily basis although there is no much consistency. Given the existing cotton prices, there is little need for the Corporation to go in for MSP operations, he said.

The international rates are higher by 4-6 cents than the domestic market but traders do not stand to gain since they are unable to supply cotton as per the contract, he pointed out.

Last year, Pakistan was the biggest exporter and had exported some 20 lakh bales from India. This time, however, because of the border tensions, cotton export to the country has been affected, industry people said. According to industry sources, Bangladesh has contracted some 2 lakh bales, China has contracted the same amount while Vietnam could export some 1 lakh bales from India. Concerns were expressed in the industry that the supply crunch had driven up prices higher than international prices and since the traders are unable to meet obligations, buyers could look to other markets.

Last month, Prime Minister Narendra Modi had scrapped R500 and R1,000 notes but the move disrupted trading of farm commodities like cotton, soya as most farmers prefer payments in cash. With expectations of a bumper crop of some 350 lakh bales, Indian traders had contracted exports for some 6 lakh bales so far to Bangladesh, China, Vietnam and Pakistan but just 6 lakh bales. Last year, the country shipped some 69 lakh bales in export.

India is the world’s largest producer of cotton and also the second largest exporter. The present cash crunch is leading to delays in sales of cotton and is creating shortages in the domestic market as well as reducing supplies to the global market, the International Cotton Advisory Committee (ICAC) said in its latest report.

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