In the gloomy market conditions for cotton growers, Gujarat government informed that in the past four months, total 25,59,696 quintal of cotton (approx 1.5 million bales of 170 kg each) have been procured by Cotton Corporation of India (CCI). This, according to traders, is much less for the largest producer of the fibre crop.
According to a statement by the government in the State Assembly, in the past four months, the State Government had represented three times to the Central government seeking intervention to provide remunerative prices to the cotton farmers.
“As on February 9, the Central government has assisted Gujarat by setting up 65 procurement centres in the State, through which CCI has procured 25,59,696 quintal kapas,” the government said in reply to a question on assistance from Centre after market prices plunged below MSP.
However, trader sources revealed that the procurement was not enough for a State like Gujarat, which grows about 30 per cent of the country’s cotton. CCI is buying at MSP level of ₹820 per 20 kg or ₹4,100 per quintal.
As per market sources, cotton procurement by CCI from other States was higher because of the superior quality and length of the fibre.
“Cotton from South India fetch better price at auction because of its fibre length of about 30-31 mm. Whereas in Gujarat, widely grown Shankar-6 has the fibre length of 28-29 mm. CCI auctions are on and daily around 25,000 bales are traded on e-auctions,” said a leading cotton exporter from Ahmedabad.
However, cotton exports are weak as China has stopped buying from India. Thin volumes of exports are done for Pakistan, Bangladesh and Vietnam.
Ratings agency and research firm India Ratings maintained ‘Negative’ Outlook on Cotton on contraction in domestic yarn production for exports, unlikely recovery in cotton exports, and a fall in domestic cotton prices below MSP have pushed domestic cotton stocks high.
“We expect the global cotton prices to be low in the medium term due to the negative sentiments. Cotton exports from India into China declined 26.4 per cent y-o-y over April-October 2014 compared to a 4.3 per cent decline the year earlier,” India Ratings said in a report.
India’s cotton exports to other destinations are unlikely to replace the quantum of lower trade with China, it said.
Raw cotton (Kapas) prices (represented by Shanker-6) are likely to trade between ₹800-900 per 20 kg, while lint (356 kg) prices will hover in the range of ₹30,260-35,600 for 2015-16.