Prices of raw unginned seed cotton correct themselves even as arrivals remain cautious

The November-October 2022-23 cotton marketing season opened with farmers commanding average prices of Rs 8,500-9,000 for a quintal in most wholesale markets. Kapas prices had, however, shown a sharp correction in December and caused farmers to panic about their price realisations. Demands were made that the Cotton Corporation of India should actively participate in open market procurement to stabilise the prices.

This season the Cotton Association of India, the body that represents the entire value chain of the industry, has downgraded its earlier production estimates by 4.25 lakh bales to 339.75 lakh bales. Combined with the 31.89 lakh bales and the estimated imports of 12 lakh bales, the total cotton available this season would be 383.64 lakh bales, as per the association’s estimates.

The new year has seen kapas farmers again commanding prices of Rs 8,000-8,500 for a quintal. Trade sources say the real price trend would be visible only after January 15, when arrivals significantly improve. “Between January 15 and May-end, almost 80 per cent of the arrivals are expected to be completed. Whatever will be held back would mostly be by big farmers or traders who would like to hold on for better prices,” said a trader from Buldhana.

Meanwhile, the decision to allow the duty-free import of 3 lakh bales of cotton from Australia has raised eyebrows in the industry. A December 28 notification said the imports were allowed as part of the economic cooperation between the two countries.

While farm leaders felt this free import (import duty is 11 per cent now) would affect the price realisation of farmers, traders thought otherwise. Pradeep Jain, founder president of the Khandesh Cotton Gin/Press Owners and Traders Welfare Association, said that India annually imported 12-14 lakh bales of superior long staple cotton. “This is mostly for specific products and 3 lakh bales will not have much effect,” he said.