Fears of a fresh Covid wave have led to a rise in everyday cotton arrivals to 2.5-3.00 lakh bales, with farmers wanting to sell their stocks on hand ahead of an additional lockdown takes place.
This has resulted in cotton rates testing levels of in between Rs 5,300 and 5,850 per quintal, from Rs 6,000 in the final week of November. The drop in rates has led to a fresh surge in getting by the Cotton Corporation of India (CCI), which stands at 40 lakh bales till date, top rated officials of CCI mentioned. In the latter aspect of November, the CCI bought only 28 lakh bales due to the fact rates had been close to the MSP and farmers preferred promoting to traders. The image has changed in the final 10-12 days, with farmers fearing an additional wave of Covid as a outcome of which the pace of arrivals has pretty much doubled, PK Agrawal, CMD of CCI, mentioned.
Last year, till November 30, everyday arrivals of kapas had been to the tune of 56 lakh bales, and this has gone up by 40% to 92 lakh bales, Atul Ganatra, president, Cotton Association of India, mentioned. By the finish of December, almost 45-50% of the total crop would arrive in the market place, causing stress on rates, he felt.
The Centre has fixed an MSP of Rs 5,850 per quintal for raw cotton (kapas) this season (October 2020-September 2021). Due to CCI procurement, kapas rates pretty much touched Rs 6,000 per quintal on November 23 ahead of began declining. “The CCI is purchasing at least 50% of arrivals in most markets. In some markets, it is purchasing more. In Telangana and Andhra Pradesh, the CCI purchase is around 70% of total arrivals, while is purchases are around 40% in Maharashtra,” Agrawal mentioned.
The Maharashtra State Cooperative Cotton Growers Federation has so far bought some 6 lakh bales.
In international markets, cotton rates ruled reduced in the 1st week of December at 71.25 cent for March contracts. The demand from the US and Europe has gone down due to a rise in Covid circumstances and Indian rates are no longer the least expensive, Ganatra pointed out.
“Exports slowed down after prices increased from Rs 37,000 to Rs 41,500 a candy,” he mentioned, adding that mentioned spinning mills have slowed down purchases as they have 30-60 days of stocks with them. “India sells its cotton at 5-7 % discount to global prices. But since Indian prices are hardly 5-7% higher than global prices, there is no export parity.”. The CAI president mentioned it would be challenging for Indian exporters to ship the targeted 60 lakh bales this season, against 50 lakh bales exported final season.
This will also outcome in the carryover stocks from this season becoming greater at almost one hundred lakh bales, compared with the estimated 87.50 lakh bales. Agrawal mentioned the market place sentiment is at the moment driving farmers to bring their make to the market place. Terming this as a short-term phenomenon, he mentioned news relating to speeding up of the vaccine would once more lead to rates firming up.
In its 1st advance estimate of industrial crops for the 2020-21 season (October-September), the agriculture ministry pegged cotton production at 371.18 lakh bales. The CAI has pegged production at 356 lakh bales.