Nagpur: After a dull start to the cotton buying season, farmers have some hope as the market prices hover in the range of ₹7,000 to 7,200 a quintal, which is marginally above the minimum support price (MSP) of ₹7,020 per quintal for long staple cotton.
Traders say the rates are likely to remain in the same range this season considering a 10% jump in global stocks.
Experts say it’s the weaker rupee against dollar which is keeping a tab on cotton prices. The rate fetched by cotton growers in the country are pegged at international price of lint (processed cotton with seeds removed) quoted in dollars per pound.
While cotton farmers in Vidarbha are complaining of low yield on account of erratic rains, the global outlook shows a higher stock internationally which can be signs of bearish rates ahead.
“At present lint is in the range of 94 to 95 cents a pound, which translates to ₹7,200 a quintal. Even in 1995 lint was around 95 pounds on average and cotton fetched ₹2,500 to ₹2,600 a quintal. This was because the greenback cost was less at that time. At present, dollar is worth over ₹83, thus keeping cotton rates up,” said Vijay Jawandhia, a veteran farm activist. In 2021, lint had touched $1.70, fetching over ₹12,000 a quintal for farmers in India, he added.
A report released by the international cotton advisory committee (ICAC) says the current price forecast predicts the rates to be in the range of 72.33 cents to 104.12 cents with a midpoint of 86.23 cents per pound. The report also says that the global reserves of cotton are at the highest level. With an increase in global production of 3% and consumption projected to fall by 0.43%, the global stocks may jump by 10%. The December futures for cotton also ended below 80 cents, says the report released early this month.
Manish Jadhav, a cotton farmer from Yavatmal, said selling stocks in the market fetches only ₹6,800 a quintal. Soyabean, the second major crop is being sold at ₹4,800 a quintal as against MSP of ₹4,300.
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