Cotton prices drop below ₹60,000/candy due to slack yarn and garment demand

Cotton prices drop below ₹60,000/candy due to slack yarn and garment demand

Cotton prices in the Indian domestic market have slipped below ₹60,000 per candy (356 kg) due to slack yarn and garment demand. However, industry players believe the situation may improve by the second week of August.

The situation has been exacerbated by the recent student unrest in Bangladesh, which killed approximately 150 people.

“Yarn movement is slow.” “Our small exports to Bangladesh have been halted due to riots there,” said a Raichur-based sourcing agent for domestic mills and multinationals. He is also the Vice President of the All India Cotton Brokers Association.

Also Read | Telangana farmers to hold protests across state as cotton prices fall

CCI reduces prices

“We only had increasing demand from Bangladesh, but that has been impacted by the unrest there.The curfew has hampered the movement of goods,” said Anand Popat, a Rajkot-based cotton, yarn, and cotton waste trader.

The Cotton Corporation of India (CCI) reduced its sale price by ₹1,800 per candy due to low demand, despite having approximately 20 lakh bales (170 kg) procured through the minimum support price (MSP) scheme, according to Das Boob.

On Monday, the benchmark for exports, Shankar-6, was priced at ₹56,800 per candy. Kapas (unprocessed cotton) was trading at ₹1,506.50 per 20 kg on MCX and ₹7,505 per quintal at Rajkot Agricultural Produce Marketing Committee Yard (APMC).

Cotton prices have fallen to less than 70 cents per pound worldwide. Cotton traded at 69.01 cents (₹45,800/candy) on the InterContinental Exchange in New York on Monday for December delivery.

Import Duty Impact

“There is no parity for spinning mills in the domestic market.” Cotton imports are subject to 11% customs duty, making them ₹5,000-6,000 more expensive than candy. It has also had an impact on our competitiveness,” explained K Selvaraju, Secretary-General of the Southern India Mills Association.

“Cotton prices have fallen to such lows after a long time. Buyers are not buying, and sellers are also not ready. “Prices are lower than the MSP announced for the new seasons beginning in October,” Popat said.

Cotton’s minimum support price (MSP) for the 2024-25 crop year has been raised to ₹7,121 per quintal for the popular medium staple variety grown in the country.”Good monsoon rain and better crop prospects have also made the market slack,” Das Boob told reporters.

Turning cautious

“2023 was a bad year. Compared to that, 2024 is not so bad,” said Selvaraju, adding that the textile sector was unable to regain its strong position from 2018-19.

With only two months until the season ends, all stakeholders have become cautious because there is ample demand to meet their needs, according to Das Boob.

“But I feel from August 15 to September-end, demand may improve and cotton could see some movement,” he stated.

Popat stated that global demand for cotton has been affected as yarn and garment offtake has been reduced.”No one wants to keep supplies in the pipeline due to the high interest rates.” “It’s more of a hand-to-mouth situation now,” he said.

Popat believes that the sector must gain confidence in order for prices to resume their upward trend, even if they have reached a low point. Also Read | Indian cotton prices begun to match with worldwide export market

Lower sowing

Das Boob stated that, while cotton sowing has been reported to be 5-7 percent lower, adequate rain and a good harvest may result in a higher yield to compensate for the decrease in acreage.

According to Poppat, cotton cultivation is sparse in Gujarat and North India. However, it performed better in Maharashtra, Madhya Pradesh, Andhra Pradesh, and Telangana. “Overall, cotton area could rise or fall by 2–3%. “A clear situation will emerge by the middle of August,” he said.

Going by the current trend, the Centre may have to ask CCI to procure cotton next season under the MSP program, stated Das Boob.