The new cotton harvest has begun to arrive in northern markets, including Karnataka and Telangana, with kapas (raw cotton) prices prevailing at least 10% higher than the Centre’s minimum support price (MSP) levels for the new season beginning in October.
The daily market arrivals are estimated to be around 10,000 bales, with the majority of them coming from the north. Modal prices (rates at which most trades in the natural fibre takes place) of raw cotton are ranging between ₹6,400 and ₹7,000 per quintal across several marketplaces, depending on the quality and moisture content. Prices are higher than the MSP per quintal of ₹ 5,726.
‘In general, the crop in North India appears to be doing well. According to Sushil Phutela, Director, Indian Cotton Association Ltd in Bhatinda, prices are in the 6,000-7,000 range, depending on moisture, which is 12-14 percent.
The North Indian harvest is expected to be greater than last year’s 65 lakh bales, according to the trade. ‘This year’s crop will not be smaller than last year’s. The rains are expected to increase harvests, while there has been some impact in some places. We anticipate a crop that is 1-2 lakh bales more than the previous year,’ Phutela said.
According to the latest figures from the Agriculture Ministry, cotton acreage is down 5.75 percent this year, at 119.66 lakh hectares. ‘The general crop condition is strong as of now, and based on feedback from the ten growing States, the yield will be considerably greater this year, and the quality will be very good,’ said Atul Ganatra, President of the Cotton Association of India (CAI), the main trade group. By the end of the month, CAI is expected to release crop projections.
Arrivals are irregular
CAI had previously assessed closing stocks for the crop year 2020-21 at 82.50 lakh 170 kg bales as of September 30. Arrivals from Karnataka, Andhra Pradesh, Telangana, Maharashtra, and Gujarat have been sporadic. ‘Kapas prices are between ₹ 6,900 and ₹ 7,500 per quintal, while cottonseed is between ₹ 3,700 and ₹ 4,000.’
Arrivals may increase after October 15, and prices may fall, but they are unlikely to fall below MSP until late November. It all relies on crop quantity and market arrivals,’ said Ramanuj Das Boob, a Raichur-based sourcing agent for spinning mills and global corporations.
According to Phutela, demand is slow because most spinning mills have met their demands until December. Demand may improve in the coming weeks if the moisture level drops. ‘I believe the Cotton Corporation of India (CCI) would enter the market in half of the growing regions by mid-November.’
Further, he added that ‘Many believe that the CCI will not be able to enter the market because the minimum pricing is higher than the MSP. However, with cottonseed prices under pressure, raw cotton could fall below MSP by mid-November.’