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The Southern India Mills’ Association

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Firm trend seen in cotton prices as CCI, corporates step up purchases

Cotton prices are seen ruling firm as State-run Cotton Corporation of India (CCI) and multinationals such as Louis Dreyfus and Glencore have stepped up purchases of the fibre crop across key growing regions in the country. More than half the estimated total crop size of 345 lakh bales has already arrived in the market.
CCI, so far, has bought 6.2 lakh bales (of 170 kg each), of which 3.67 lakh bales have been purchased under the Price Support Scheme at a minimum support price of Rs. 4,270 per quintal. “The remaining 2.53 lakh bales has been purchased under CCI’s commercial operations. The market prices are ruling above the MSP level and considering the viability, we sell to our consumers — the textile mills. Currently, we are conducting commercial purchases for about 10,000 bales daily,” sources at CCI said. CCI’s purchases at MSP were mainly in the initial two months of the cotton arrival season, when the market prices had dropped below the Rs. 4,000-a-quintal mark in various markets owing to increased arrivals and higher crop estimates. “So far, about half of the crop, nearly 165 lakh bales, has already arrived in the market. The exports have crossed over 22 lakh bales. Going forward, the quality issues may crop up and prices may firm-up further. However, all eyes are on the upcoming Budget anticipating some boost for the textiles sector, which can push up the cotton demand,” said Arun Dalal, a cotton trader in Ahmedabad.
Arrivals, prices
With steady arrivals, raw cotton or kapas prices at Gujarat markets hovered around Rs. 1,030-1,050 per 20 kg or Rs. 5,150-5,250 per quintal. The prices corrected marginally from the peak of Rs. 5,500 on increased arrivals. In other markets of Telangana, Karnataka and Maharashtra, the prices are hovering between Rs. 4,800 and Rs. 5,200. Ginned cotton prices hovered at Rs. 41,800 per candy of 356 kg, which is about Rs. 700 lower than what was seen a month ago.
Strong buying interest
“There’s lot of MNC buying interest, which is supporting the prices. The local mills are also buying actively,” said Ramanuja Das Boob, a sourcing agent for the global firms based in Raichur, Karnataka, where an estimated 9-10 lakh bales have arrived in the market. In Telangana, the market arrivals have been pegged at 35-37 lakh bales. Boob said the prices were expected to remain stable, but the trend would largely depend on the New York futures.