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In Punjab markets, an unlikely victim of Russia-Ukraine tension: cotton

With buyers adopting a cautious approach, the prices of the raw natural fibre, which had skyrocketed to nearly double the minimum support price (MSP) amid shortfall in production and hoarding of stocks by farmers, have crashed by as much as Rs 10 per kilo in Punjab markets.

BT (Bacillus Thuringinesis) cotton is the only GM cotton allowed for commercial cultivation in the country. It is preferred by farmers as it is resistant to the pink bollworm (PBW). (Representational)

Amid an expected shortage of cotton with the crop suffering a pesticide attack earlier, the sentiments in the yarn market in Punjab have further dampened following the military invasion of Ukraine by Russia, as it is being feared that the prolonged tension between the two countries would severely affect the exports.

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With buyers adopting a cautious approach, the prices of the raw natural fibre, which had skyrocketed to nearly double the minimum support price (MSP) amid shortfall in production and hoarding of stocks by farmers, have crashed by as much as Rs 10 per kilo in Punjab markets.

Cotton had been trading at Rs 10,500 per quintal in the open market in Punjab, as against the minimum support price of Rs 5,726 per quintal for medium variety and Rs 6,025 per quintal for long staple. The prices have now come down to Rs 9,500 per quintal.

“It seems as if they have bombed my cotton storage house,” said Jagjeet Singh Dhaliwall, a farmer from village Achariki in Fazilka.

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Dhaliwall claimed that when cotton started arriving in the market, the farmers were getting Rs 6,500 per quintal, which was already more than the MSP.

“The prices soon shot up to Rs 8 per kg amid a shortfall in production in Rajasthan. The cotton mills in Hanumangarh, and Sriganganagar started picking cotton from Punjab pushing up the prices in the local market. In between, the standing crop in Punjab suffered bollworm attack leading to lesser production. The less production, combined with higher demand jacked up the natural fibre rate to Rs 10.50 per kilo by November and December,” said Dhaliwall.

He claimed that considering the higher prices, the mill owners had started interacting directly with cotton farmers. “The mill owners had been visiting villages to buy directly from farmers. Looking at the skyrocketing prices, many farmers had stored the produce,” the cotton farmer added.

Another cotton farmer, Gurmeet Singh Dharangwala, from Dharangwala village of Fazilka said that despite the crash, the prices were still on the higher side and the farmers can still make good profit. “However, considering that the prices in the international market are falling, the price difference is going to pinch,” said Dharangwala.

The area under cotton crop last kharif season was 3.5 lakh hectares, which was maximum in last six years and up by one lakh hectares over previous year’s figure. Amid hope of a bumper production, untimely rain and later bollworm attack played spoilsport. In 2020, a total of 64.85 lakh bales of cotton had arrived in the market but in 2021, it fell to 48.20 lakh bales.

Jitender Singh, secretary, Indian Cotton Association, linked the crash in cotton prices to the ongoing tension between Russian and Ukraine. “It has affected the prices in the international market. When international market registers a crash, the prices fall in the local markets too,” said Jitender Singh.

He said only a fraction of the produce has been procured by the Cotton Corporation of India, which buys it at the MSP.