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The rise in cotton MSP may be good news for farmers, but raises concerns for the consuming industry, considering that the base price of the white fibre will go up in the next cotton year.
“Cotton acreage is bound to go up by 10-15 per cent in the next season,” an industry source opined.
Prices may rise
J Thulasidharan, President of the Indian Cotton Federation (ICF), said the price of kapas (raw cotton) today was equal or more than the estimated revised MSP. “During the coming season, the impact (on cotton prices) is expected to be marginal. However, due to the rise in the price of other oilseeds, a corresponding increase in cottonseed prices cannot be ruled out,” he said.
An industry source sowing in Maharashtra and Gujarat was not in full swing as yet, while it was almost over in Telangana.
“The industry has been expecting this announcement. In fact, we have been advising our members to import cotton at least for two months. This was not after hearing the rise in cotton MSP, well before this development,” said Prabhu Damodharan, Secretary, Indian Texpreneurs Federation. Traders are sure that the rise in cotton MSP will eventually result in a higher average price for the current 2018-19 season, which is likely to near ₹47,000 per candy ( of 356 kg).
Arun Dalal, a cotton expert in Ahmedabad, noted that cotton prices have been on the rise due to multiple factors including export demand. “Last year, the average price for cotton hovered at ₹41-42,000 per candy, which was ₹39-41,000 in the previous year. This year, in 2018-19, we expect prices to make new highs and will maintain that level,” he added.
A leading exporter from Ahmedabad informed that with stocks lying with the traders, prices may be jacked up. Possibly there may be a break in supply for a short duration as they wait for prices to go up.
“Those having cotton stocks will wait for the good prices now as the sentiment is upbeat about cotton prices. There is no possibility of sharp downside in the prices as our prices are competitive in the international market giving us an edge over the US cotton for Chinese market,” said a senior official of a leading cotton exporting company.
International cotton prices hover around 83-84 cents on the ICE futures.
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