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Cotton prices to soften as arrivals set to increase, says CAI

2021-12-01 18:19:28
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Cotton prices to soften as arrivals set to increase, says CAI

Cotton prices in India are expected to soften from their peak levels of around ₹8,000-8,800 a quintal (raw cotton) as the arrivals gain momentum, stated the chief of the top cotton body Cotton Association of India (CAI).

Acknowledging that the cotton arrivals in India have been delayed partly due to the unseasonal rains and other factors, Atul Ganatra, President, CAI, stated that “cotton prices in India will fall once the arrivals pick up.”

Addressing the 99th Annual General Meeting of the trade body on November 30, Ganatra expressed no need for restrictive measures to tame the spiralling prices, which have crossed ₹8,000 per quintal in several markets. “It does not require implementation of any restrictive measures to tame the cotton prices against the long- term interest of the entire cotton value chain including farmers,” Ganatra said adding that better realisations for cotton growers will encourage them to bring larger area into cotton next year.

Regarding Indian cotton’s competitiveness in the international market, Ganatra stated that it is traditionally traded at a discount in the international markets compared with other competing countries. “Imposition of duty and other retrograde measures, when implemented, send a wrong signal and raise questions about the credibility of the whole country as a regular cotton supplier to the international market, thus playing a very vital role in attracting discounts,” he said.

“Although farmers have a protection in Minimum Support Price, yet they deserve an opportunity to earn international prices like their counterparts in USA, Australia, Brazil and other developed countries. Therefore, at CAI we, believe in a free trade policy without any fetters,” Ganatra said.

India enjoys a competitive advantage globally with its cheaper cotton prices. “Although Indian cotton prices have risen by about 58% during the last one year due to the strong fundamentals, yet they are still the cheapest in the world,” Ganatra said, adding that the comparable price rise in the international market as reflected in the Cotlook A index is much higher at 63%.

Processed ginned cotton in India was quoted at ₹64,500 per candy (356 kg) on November 30, up from ₹57,000 quoted at the beginning of the season on October 1, 2021.

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