By Nayan Dave
Though progressive cotton sowing in India has crossed last year’s 12-million-hectare mark till now this season, prices are still hovering around Rs 91,000 to Rs 96,000 per candy (356 kg per candy) and it is unlikely to subside till fresh cotton crop hits the market in October.
Earlier this year, cotton prices soared up to Rs 110,000 per candy due to overall demand from the textile sector. Exactly a month ago, cotton prices dipped to Rs 80,000 to Rs 85000 per candy due to declining demand. However, limited availability of cotton in the market has once again raised prices, said Avdhesh Sejpal, president of All India Cotton, Cotton Seeds and Cotton Cake Brokers Association.
Sejpal claimed that despite increased acreage of cotton across the country, prices are unlikely to go below Rs 70,000 per candy even after fresh cotton arrival post-Diwali as cotton crop output in the US and China is likely to remain low.
Apart from this, the Cotton Corporation of India (CCI) has not been able to purchase much cotton as farmers are preferring to sell their yield in the open market as they fetch higher than MSP prices. Hence, there would be extremely low carry forward stock for the upcoming cotton season, he added.
Cotton Association of India (CAI) president Atul Ganatra said that looking at the lower rates of December futures (103 cents) at the US-based Intercontinental Exchange (ICE), Indian cotton rates would come down to Rs 62,000 to Rs 67,000 per candy around December.
“Cotton sowing in India has reached 12.2 million hectare so far. Current crop condition is good. It means there would be bumper cotton crop provided there is no excessive rain in coming days,” said Ganatra.
Experts of cotton trade, including Ganatra, firmly believe that cotton prices during 2021-22 season were artificially inflated in the Indian market considering international cotton rates. They said that even the current rate of cotton is much higher despite lower demand for the commodity as a result of speculative activities.
Interestingly spinning mills in the country are still buying in smaller quantities as there is some demand in the domestic market, said Gautam Dhamsania, secretary of Spinners Association of Gujarat (SAG), adding, “Of the 120-odd spinning mills in Gujarat, 15 have shut operations till the fresh arrival of cotton. Others are functioning at 30 to 35% capacity. There is negligible export demand for cotton yarn. Hence, spinners are operating as per their current orders.”
Dhamsania said that fresh cotton crops in Pakistan and Turkey have started coming into the market, but the global textile industry is waiting for cotton harvest in India, China and the US which would decide international prices the coming months.
“Maharashtra, Punjab, Haryana, Rajasthan, Madhya Pradesh, Karnataka, Andhra Pradesh, Telangana and Tamil Nadu are the major cotton producing states in India apart from Gujarat. Acreage under cotton cultivation in Maharashtra has exceeded 4 million hectare. In Gujarat, cotton sowing may touch 2.7 million hectare. In North and South Indian states, acreage under cotton cultivation is nearly 1.5 million hectare and 4 million hectare, respectively.