In the past month, Indian cotton prices have increased by 5 per cent, following a bullish trend in international prices. However, cotton exports are strong, as Indian cotton is cheaper than foreign varieties.
Traders, millers and brokers are up against the fact that the rising trend in cotton prices will continue in 2021-22 due to projections of lower sowing in major cotton-growing countries such as the United States, Brazil and India.
Cotton prices rose to ₹ 46,000 per candy of 356 kg from ₹ 44,000 over the past month, as domestic cotton production is expected to be much lower than expected earlier. As against the previous estimate of 40 million bales, the industry now expects the production of some 33 million bales of cotton in 2020-21.
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 soya beans with higher returns, have also supported domestic prices.
Since Indian cotton prices are 13 per cent cheaper than the prevailing global cotton prices, exports are expected to be higher than the previous estimate of 6 million tonnes. The industry is eagerly awaiting the decision of the Government of Pakistan to import cotton from India.
‘Traders are watching to see if Pakistan, which is traditionally the largest importer of Indian cotton, can open its doors to Indian cotton, as its cotton industry has reportedly demanded from the government of that country,’ said Pradip Jain, president of the Khandesh Ginning and Pressing Association.
Thanks to good open market prices and good demand from traders and millers, the Cotton Corporation of India (CCI) has sold 75% of its cotton stock this season. ‘Our opening stock was 115 lakh bales of 170 kg each on the 1st of October, when the new cotton season began.
During the current 2020-21 cotton season, we produced 92 lakh bales of cotton at a minimum support price (MSP). Of the total stock of 207 lakh bales, we now have only 50 lakh bales left,’ Pradip Agarwal, Chairman of the CCI, mentioned.
Since 1 March, the Cotton Corporation of India (CCI) has offered free time to millers as well as traders, allowing buyers to purchase cotton at today’s price and up to 90 days later, depending on the quantity they choose.