CCI steps in to procure cotton as prices plunge

With cotton prices falling below the minimum support price levels, the Cotton Corporation of India has begun procurement in the select markets of Karnataka, Telangana, Andhra Pradesh and Maharashtra.

On Monday, Cotton Corporation started a purchase centre for this season at Gadag in North Karnataka, while it has been buying from Adilabad, Shadnagar, Warangal, Guntur in neighbouring Telangana and Andhra Pradesh for the past few days.

So far, it has purchased some 17,000 bales (170 kg each) cotton across the country. Bulk of the purchases has been made from the Telangana and Andhra Pradesh, a senior official said.

“We are purchasing wherever the prices has dropped below the MSP levels,” he said.

The Centre had declared a support price of ₹4,050 a quintal for the current season that began this month. The Cotton Corporation has also opened centres in Maharashtra, Punjab and Haryana, but the procurement has been less as prices have been hovering a bit higher than the MSP levels. It has not set any procurement target for the current season.

In Karnataka, the modal price or rate at which most trades in cotton took place was ₹3884 a quintal at Gadag, while it was ₹3,750 at Raichur on Tuesday. In Kadi, Gujarat, kapas or raw cotton ended marginally lower at ₹870.5 for a maund of 20 kg.

A four per cent tax levied by the Andhra Government on cottonseeds makes it expensive to buy from that State, said M B Lal, Managing Director of Shail Exports. Also, high moisture content in raw cotton is keeping buyers away, Lal said adding that the Cotton Corporation is forced to intervene quickly there.

Against the accepted natural moisture level of around eight per cent, the levels in Andhra Pradesh cotton varies between 15 and 20 per cent as farmers pour water on kapas before bringing them to markets. “Prices are expected to come under pressure with the pick up in arrivals from mid-November,” said Ramanuja Das Boob of the Raichur-based Bhagawan Cotton Ginners Pvt Ltd. He said the mills are buying selectively as the stocks with them will last till November.

The downtrend in cottonseed prices is also influencing cotton prices, Boob said. Cottonseed prices have dropped by over 10 per cent from ₹1800 per quintal to around ₹1,600 in the last couple of weeks. Also, the cotton prices are expected to be bearish on expectations of a record harvest amidst restrictions on imports by China, world’s large importer.

Farmers in India have planted a record 12.57 million hectares and production is projected to exceed four crore bales this year.

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