cotton prices: Indian cotton prices increase 5% in a month; trade expects upward trend to continue

Economy


Prices of Indian cotton have increased 5% in the past one month, following the bullish trend in international prices. However, cotton exports are strong as Indian cotton is cheaper than the overseas varieties.

Traders, millers and brokers are upbeat that the rising trend in cotton prices will sustain in 2021-22 owing to projections of lower sowing in major cotton growing countries such as the United States, Brazil and India.

Cotton prices have increased to Rs 46,000 per candy of 356 kg from Rs 44,000 over the past month as the domestic cotton production is expected to be much lower than expected earlier. As against the earlier estimate of 40 million bales, the industry now expects the 2020-21 cotton production to be about 33 million bales.

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Projections of lower output in the next cotton crop in major cotton producing nations including the US and Brazil as farmers shift to maize and soybeans, which have given better returns, have also supported domestic prices.

Indian cotton prices being 13% cheaper than the prevailing global cotton prices, exports are expected to be higher than earlier estimates of 6 million tonnes. The industry is keenly awaiting the decision of the Pakistan government regarding import of cotton from India.

“Traders are watching if Pakistan, traditionally the largest importer of Indian cotton, can open its doors for Indian cotton as reportedly demanded by its cotton-based industry from the government of that country,” said Pradip Jain, president, Khandesh Ginning and Pressing Association.

Thanks to good prices in the open market and good demand from traders and millers, the Cotton Corporation of India (CCI) has offloaded 75% of its cotton stock this season. “Our opening stock was 115 lakh bales of 170 kg each on October 1, when the new cotton season began. We procured 92 lakh bales of cotton at minimum support price (MSP) during the ongoing 2020-21 cotton season. Of the total stock of 207 lakh bales, we are now left with only 50 lakh bales,” said Pradip Agarwal, chairman, CCI.

Since March 1, the CCI has offered a free period to millers as well as traders, allowing buyers to purchase cotton at today’s price and lift it up to 90 days later depending upon the quantity they opt to purchase.



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