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With new arrivals, cotton rates above MSP

2021-09-20 11:01:05
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With new arrivals, cotton rates above MSP

Trade estimates prices to fall by Nov as more bales hit the market
The new cotton crop has begun arriving in northern markets, Karnataka and Telangala with prices of kapas (raw cotton) ruling at least 10 per cent higher than the minimum support price (MSP) levels fixed by the Centre for the new season starting October.

The trade estimates the daily market arrivals at over 10,000 bales, bulk of it mainly in the North. Modal prices (rates at which most trade in the natural fibre takes place) of raw cotton are hovering between ₹6,400 and ₹7,000 per quintal across various markets, depending on the quality and moisture content. Prices are higher than the MSP of ₹5,726 per quintal.

“Overall, the crop looks good in North India. The prices are in the ₹6,000-7,000 range, depending on moisture, which is 12-14 per cent,” said Sushil Phutela, Director, Indian Cotton Association Ltd in Bhatinda.

The trade expects the North India crop to be better than last year’s 65 lakh bales. “The crop won’t be less than last year. The rains are seen boosting yields, while in some areas there has been some impact. Overall, we expect the crop to be 1-2 lakh bales higher than last year,” Phutela said.

Cotton acreage this year is lower by 5.75 per cent at 119.66 lakh hectares, as per Agriculture Ministry’s latest data. “The overall crop condition is good as on date and, based on the feedback from the 10 growing States, the yield will be much higher this year and quality very good,” said Atul Ganatra, President, Cotton Association of India (CAI), the apex trade body. CAI is expected to come out with crop projections by the month-end.

Sporadic arrivals

CAI had earlier estimated closing stocks for the crop year 2020-21 as on September 30 at 82.50 lakh bales of 170 kg each. Sporadic arrivals have also started from Karnataka, Andhra Pradesh, Telangana, Maharashtra and Gujarat. “Kapas prices are ₹6,900-7,500 per quintal, while cottonseed trades in the ₹3,700-4,000 range. Arrivals will increase after October 15 and there are chances of prices coming down, but unlikely to go below MSP till November-end. It all depends on the crop size and market arrivals,” said Ramanuj Das Boob, a sourcing agent for spinning mills and multinational companies in Raichur.

Phutela said the demand is slow as most of the spinning mills have covered their needs till December. If the moisture comes down, demand may improve over the next couple of weeks. “I think by mid-November, the Cotton Corporation of India (CCI) may enter the markets in half growing regions. Many feel that the CCI may not get a chance to enter the market as minimum prices are above MSP. However, with cottonseed prices coming pressure, raw cotton may also come down below MSP by mid-November,” Phutela said.

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