Source: The Hindu Businessline

Starts buying in Gujarat, Telangana; expects arrivals to rise post Nov 15

RUTAM VORA

AHMEDABAD, NOVEMBER 6

At a time when cotton has started to arrive in the market, dragging the price down, the Cotton Corporation of India (CCI) has begun procurement operations at select places in Gujarat and Telangana. According to top CCI officials, the agency will procure at important cotton growing locations as and when the prices go below the Minimum Support Price (MSP) level once the arrivals gather pace, most likely after November 15.

“Till now we have procured about 40,000 bales (approximately 200,000 quintals) of cotton mainly from Telangana and a small quantity of about 3,000 bales from Gujarat. Currently, the prices at most places are hovering at around the MSP level. We expect some pressure on prices after increase in arrivals post November 15. Then we will step up the procurement,” said MM Chockalingam, Director (marketing), CCI. Speaking to BusinessLine, Chockalingam hinted that the CCI may procure about 100 lakh bales (of 170 kg each) this year as the country eyes a bumper crop of the fibre.

Bumper harvest

Last week, urging the government to direct the CCI to procure 100 lakh bales, the India Cotton Federation had written to Prime Minister Narendra Modi estimating a record 400-lakh-bale output for the cotton season 2017-18 due to a 20 per cent increase in the acreage. In Gujarat, daily arrivals of raw cotton (kapas) have touched about 28,000 bales and are expected to rise significantly in the next fortnight.

Rising arrivals

“Since the beginning of arrivals, post Diwali, prices have been quoting lower. Currently, prices are ruling at Rs.830-900 per maund (of 20 kg). The prices may fall on increased arrivals later this month,” said a farmer from Bodeli in central Gujarat. The CCI has entered the market in Gujarat to procure cotton from 17 out of 22 centres in the State.

“As against last year there will be increased procurement because of the lower prices. We will start the procurement the moment prices dip below the MSP (Rs.4,270/quintal). We are paying MSP plus the Rs.500 per quintal bonus announced by the State, thereby effectively putting the procurement prices at Rs.4,750,” said a CCI source in Gujarat.

Acreage up

According to CCI officials, procurement in other States, including Maharashtra, Andhra Pradesh and Karnataka, will begin once the arrivals pick up. As per the Centre’s first advance estimate , cotton production is likely to reach 3.22 crore bales, while the trade estimates the output to cross 4 crore bales. Gujarat is likely to produce about 25 per cent of the country’s overall production. Cotton acreage in the State has increased to 26.4 lakh hectares against 24 lakh hectares last year. Nationally, the acreage is estimated to be higher by 10 per cent at about 111.55 lakh hectares (92.33 lakh hectares).

Price outlook

Arun Dalal, a cotton expert, noted, “Cotton arrivals are still lower as against normal, mainly due to the delay in monsoon withdrawal. But soon we will have increased arrivals. The prices will remain range-bound and may come under pressure on increased arrivals.” Internationally, too, the prices may remain under pressure as higher crop is expected. A latest estimate put out by the International Cotton Advisory Committee projected 2017-18 global cotton production at 25.57 million tonnes against 23.05 million tonnes in 2016-17. (Source: The Hindu Businessline)