Cotton prices in wholesale mandis have firmed up due to government procurement by the Cotton Corporation of India (CCI). Wholesale prices are now between Rs 5,300 and Rs 5,400 per quintal with trade sources not ruling out further price rise fueled by export demand.
On Monday, the Cotton Association of India (CAI) revised its earlier export estimates for the cotton marketing year (October to September 2020-21) to 54 lakh bales of 170 kg each from the previous 60 lakh bales. But some traders said exports might cross 65 lakh bales given the demand in international markets, especially in Bangladesh. Indian cotton at present has a price advantage in international markets with the Indian candy (346 kg of ginned combed cotton lint) selling at Rs 40,000 per candy, as compared to Rs 41,000 per candy from other major cotton producers in the world.
Pradeep Kumar Jain, founder chairman of the Khandesh Cotton Gin/Press Owners and Traders Development Association, said the majority of buying at present is by government agencies. “Private buyers are finding it difficult to get buyers given the slowdown in textile sector. So, the rally in the market is mostly due to government procurement,” he said.
While Indian cotton is enjoying a rare price parity in international markets, Jain said favourable tail winds like demand from other countries or further increase in international price would see a price rise in domestic markets.
The immediate cause of concern for many is the sudden dip in demand and prices of cotton seed. “In case the Rupee depreciates, the Indian exporter would see more consignments going out of the country,” said a trader.
Meanwhile, the CCI has accelerated its procurement with 390 of the 450 procurement centres of the corporation actively buying cotton at the government-declared Minimum Support Price of Rs 5,825 per quintal.
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