Reduced Sowing, Tight Supply, and Delayed Crop Arrivals Lead to Rising Cotton Prices
Cotton prices have surged recently due to tight supplies, reduced kharif sowing, and reports of continuous rainfall affecting crop prospects in key producing states like Gujarat and Maharashtra. Spot prices have increased by ₹1,500-2,000 per candy (356 kg) over the past two weeks, representing a 2.5-3 percent rise. Trade experts expect prices to remain steady, with arrivals likely delayed by 15-30 days due to excessive rains.
Atul Ganatra, President of the Cotton Association of India (CAI), attributes the price increase to several factors, including a shortage of cotton, a tight closing balance sheet, and reduced sowing. Closing stocks for the 2023-24 season, ending in September, are projected to be below 20 lakh bales (170 kg each).
Additionally, the recent uptrend in cotton futures on the Intercontinental Exchange (ICE), where prices have risen from 66.35 cents to 70.35 cents, has also contributed to the local price hike.
Ganatra also noted that reduced sowing could impact cotton production for the upcoming 2024-25 season, starting in October. According to the Agriculture Ministry’s latest data, cotton acreage for the current kharif season is down 9 percent, totaling 111 lakh hectares compared to last year’s 122.15 lakh hectares.
The decline in acreage is most significant in northern states like Punjab, Haryana, and Rajasthan, as well as in major cotton-producing states such as Gujarat and Maharashtra. In Gujarat, acreage has decreased by 12 percent to 23.58 lakh hectares, while Maharashtra’s cotton area is down to 40.78 lakh hectares from 41.86 lakh hectares last year.
The continuous rains have raised concerns about potential crop damage, particularly in Gujarat and Maharashtra. Ganatra notes that heavy rains in these regions have resulted in waterlogged fields, with some areas receiving 20-30 inches of rainfall over the past few days.
However, Rajkot-based trader Anand Poppat suggested that while excess rain could harm crops in specific areas of Gujarat, Maharashtra, and Madhya Pradesh, overall, the rains might be beneficial. Poppat believes the upward trend in prices will continue due to tight stock levels and delayed arrivals caused by late sowing across the country.
Pradeep Jain, President of Khandesh Gin Press Association in Jalgaon, noted that despite concerns, the crop is in good condition with minimal pest issues, potentially better than the last 2-3 years. Jain added that increased demand for cotton is supporting prices, particularly as there are currently no new arrivals of raw cotton.
Ramanuj Das Boob, Vice President of the All India Cotton Brokers Association in Raichur, observed that the crop in Karnataka, Telangana, and Andhra Pradesh looks promising due to timely and adequate rainfall. Boob echoed the sentiment that delayed crop arrivals have driven recent price increases of ₹1,500-2,000 per candy, with the market likely to remain steady until the end of September. He also noted that reduced stock levels with the Cotton Corporation of India, multinationals, and traders will continue to support prices.Cotton Prices Rise Amid Tight Supplies, Lower Sowing, and Delayed Crop Arrivals
Cotton prices have surged recently due to tight supplies, reduced kharif sowing, and reports of continuous rainfall affecting crop prospects in key producing states like Gujarat and Maharashtra. Spot prices have increased by ₹1,500-2,000 per candy (356 kg) over the past two weeks, representing a 2.5-3 percent rise. Trade experts expect prices to remain steady, with arrivals likely delayed by 15-30 days due to excessive rains.
Atul Ganatra, President of the Cotton Association of India (CAI), attributes the price increase to several factors, including a shortage of cotton, a tight closing balance sheet, and reduced sowing. Closing stocks for the 2023-24 season, ending in September, are projected to be below 20 lakh bales (170 kg each).
Additionally, the recent uptrend in cotton futures on the Intercontinental Exchange (ICE), where prices have risen from 66.35 cents to 70.35 cents, has also contributed to the local price hike.
Ganatra also noted that reduced sowing could impact cotton production for the upcoming 2024-25 season, starting in October. According to the Agriculture Ministry’s latest data, cotton acreage for the current kharif season is down 9 percent, totaling 111 lakh hectares compared to last year’s 122.15 lakh hectares.
The decline in acreage is most significant in northern states like Punjab, Haryana, and Rajasthan, as well as in major cotton-producing states such as Gujarat and Maharashtra. In Gujarat, acreage has decreased by 12 percent to 23.58 lakh hectares, while Maharashtra’s cotton area is down to 40.78 lakh hectares from 41.86 lakh hectares last year.
The continuous rains have raised concerns about potential crop damage, particularly in Gujarat and Maharashtra. Ganatra notes that heavy rains in these regions have resulted in waterlogged fields, with some areas receiving 20-30 inches of rainfall over the past few days.
However, Rajkot-based trader Anand Poppat suggested that while excess rain could harm crops in specific areas of Gujarat, Maharashtra, and Madhya Pradesh, overall, the rains might be beneficial. Poppat believes the upward trend in prices will continue due to tight stock levels and delayed arrivals caused by late sowing across the country.
Pradeep Jain, President of Khandesh Gin Press Association in Jalgaon, noted that despite concerns, the crop is in good condition with minimal pest issues, potentially better than the last 2-3 years. Jain added that increased demand for cotton is supporting prices, particularly as there are currently no new arrivals of raw cotton.
Ramanuj Das Boob, Vice President of the All India Cotton Brokers Association in Raichur, observed that the crop in Karnataka, Telangana, and Andhra Pradesh looks promising due to timely and adequate rainfall. Boob echoed the sentiment that delayed crop arrivals have driven recent price increases of ₹1,500-2,000 per candy, with the market likely to remain steady until the end of September. He also noted that reduced stock levels with the Cotton Corporation of India, multinationals, and traders will continue to support prices.
Read more :>Possibility of pressure on cotton prices, despite decline in area and productivity
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