Purchases made by the Cotton Corporation of India remain tepid on weak arrivals.
The country has exported close to 10 lakh bales of cotton so far to Bangladesh, Vietnam and Indonesia this kharif season, according to industry experts.
The total exports are likely to touch 65 lakh bales even as cotton purchases made by the Cotton Corporation of India remain tepid on weak arrivals. The cotton prices are hovering around minimum support prices (MSP) of Rs 5,150 per quintal for medium staple variety and `5,450 per quintal for long staple variety. The MSP for this season is Rs 1,130 per quintal higher as compared to last year.
In the international cotton market, cotton prices have dropped from 84 to 79 cents on New York futures in last 15 days. The candy rates (356 kg) for the commodity have come down to `44,000 from `47,500. However, the prices of the commodity in Maharashtra, Telangana, Madhya Pradesh are stable on poor arrivals.
According to the ginning community, the sentiment has been weak from October this year from the start of the season and the situation is likely to continue till mid-January.
So far this season, the total arrival in India has been to the tune of 65 lakh bales against 70 lakh bales during the corresponding period last year. Though the Cotton Advisory Board has pegged this year’s crop at 361 lakh bales, down 2.4% on year, most stakeholders believe the number could be much lower, and prices would start rising once arrivals from the first picking are completed by the end of December. Mills also have been stocking up on cotton, anticipating a fall in supply in the not too distant future.
Because of the low arrivals, more than 70% of the ginning units in Khandesh in Maharashtra are yet to commence operations.
According to Pradeep Jain, founder president, Khandesh Gin/Press Owners Association, the ginning industry continues to face shortage on weak arrivals. The daily requirement is around 4 lakh bales and barely 2 lakh bales are available on a daily basis. First pickings in Maharashtra, Madhya Pradesh, Gujarat and Telangana are in the final stages. Jain added that ginners are facing problems because there is no parity and there are payments issues in addition to fears about quality of cotton from next month. Khandesh has some 150 ginning units. Jain expects prices to pick up after December when arrivals peak.
Jain felt that the quality parameters set by CCI could also bring down prices once arrivals peak. As per CCI FAQ parameters, cotton with more than 12% moisture is not eligible for purchase. In the north, there have been reports of farmers selling to commission agents because they do not wish to spoil their relationship with them. Farmers started to sell cotton as they had no expectation of a further rise.
Cotton Association of India has pegged the country’s production in 2018-19 at 348 lakh bales (one bale= 170 kg), down nearly 5% from a year ago. The US agriculture department has also lowered its estimate for India’s ending stock of cotton for the current season to 89.8 lakh bales ( One bale= 218 kg) from 118.8 lakh bales projected in September.