Supply Chain Council of European Union |

Cotton procurement by traders and government agency to gather pace from December

New Delhi: Procurement of cotton that started in October is likely to gather pace from mid-December, as that is when good-quality supplies reach the market, officials at the state-run Cotton Corporation of India (CCI) said.

The initial arrivals this year have not been good due to extended rains across Maharashtra, Gujarat, Telangana and parts of Rajasthan that affected the quality of the fibre. Traders said the quality has improved now in the North, but in western India, the crop was with high moisture content, poor colour grade and low micronaire value (based on air permeability). These have caused prices to rule below the minimum support price (MSP) and led to no major buying by traders and companies.

“We have procured 3-4 per cent of the total 30 lakh bales (170 kg each) of cotton arrived this season in the market. Due to the rains, the initial crop was not of good quality. Now, we expect a pickup in purchase,” Cotton Corporation of India chairperson P Alli Rani said.

Rani said last year, by this time, the CCI had procured only 2,000 bales of cotton as prices were 1 per cent higher than the MSP. Due to the high prices, traders were active in the market, unlike this year, she said.

This year so far, the agency has purchased about 1 lakh bales.

From the beginning of November, the CCI has been buying 10-12 per cent of cotton arriving in the market. She now expects this to go up.

“With USA and Brazil having surplus cotton crop, it is giving tough competition to Indian exporters. Further, poor demand of yarn from China and a slowdown in the domestic market have kept cotton prices subdued,” said Mahesh Sharda, the president of the Indian Cotton Association.

Sharda said the current prices in mandis were Rs 5,000-5,400 a quintal. “By December, we can expect good-quality cotton and if global demand picks up, the domestic prices too will increase,” said Sharda.

The CCI was buying cotton at the MSP of Rs 5,550 per quintal across all major cotton-producing states except Tamil Nadu and Odisha. This year, the industry estimates production to be 355 lakh bales, which is higher by 42 lakh bales compared with the previous year.

“We will be present in the market till late March and for Odisha and Tamil Nadu even after that. If prices don’t go up, then we will continue to buy,” said Rani.

Officials at the CCI said looking at past experience of procurement, they were geared up to buy 100 lakh bales this year. Last year, the CCI had procured 10.70 lakh bales under MSP out of which it has 9 lakh bales in its stock.

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