Cotton prices seem to have bottomed out and there is some demand coming from spinning mills at the lower end of prices, trade sources said.
Cotton prices, which had touched a seasonal low of ₹53,000 per candy (of 356 kg) due to lack of demand, remain stable and are rising marginally on the back of purchase of raw cotton at minimum support price (MSP) by the Cotton Corporation of India (CCI) provides some support.
Raw cotton or cotton prices are between ₹6,500 and ₹7,000 per quintal across the country, well below the MSP of ₹7,521.
Cotton prices are under pressure even though a lower harvest is expected this season due to the decline in acreage. The lack of demand from mills coupled with the decline in cottonseed prices is weighing on raw cotton prices. Cottonseed prices, which were in the range of ₹3,600-4,100 per quintal in various markets at the start of the season, have now fallen to ₹3,000-3,500 per quintal as demand falls.
Good quality
The daily supply of fiber is slowly increasing and hovers around 1.6 lakh bales. In the absence of sufficient demand from factories, more than half of the market supply is sourced by CCI at MSP, sources said.
“Lately, some demand has been coming in at the lower prices,” said Ramanuj Das Boob, a purchasing agent for multinationals and domestic companies in Raichur. Cotton prices had recently touched a low of ₹53,000 per sweet from the season opening level of ₹57,500 and have seen some recovery in the last two days to around ₹500-1,000 per sweet. Prices now stand at ₹53,000-54,000 per sweet.
Das Boob said prices appear to have bottomed out and buying at this level is good for millers. As the quality of cotton is good in Raichur and Adoni regions this year, millers from the north are buying from the region. In Northern India, production fell this year due to a decline in the area under cultivation.
“Farmers in Gujarat are holding back cotton at current prices. As a result, the ginning activity is slow. Some ginners source cotton from Maharasthra and Karnataka,” said Anand Poppat, CEO of Cotyarn Tradelink in Rajkot. Poppat further said that prices have bottomed out and are unlikely to fall from current levels.
Ask about slack yarns
Das Boob said procurement by factories in the South has been slow due to lack of demand for yarn and tight liquidity. Also, the dip in ICE futures has prompted multinationals to stay away from the market, he said.
“This season is not in favor of the farmers, nor of the ginning companies or of the spinning mills. Farmers are reluctant to sell and are waiting for the price to rise,” said Pradeep Kumar Jain, president of Khandesh Cotton Gin/Press Owners and Traders Association in Jalgaon. Cotton prices range between ₹6,500 and ₹7,000 levels in Maharashtra. “Farmers want ₹7,500 or more per quintal but ginners cannot afford this due to current market conditions. It is difficult to predict the market as there is no support,” said Jain.
The Cotton Association of India, the apex trade body for the sector, has forecast a drop in production of 7 per dip of 302 lakh bales (of 170 kg each) for the 2024-25 season. CAI has pegged consumption at 313 lakh bales. According to CAI data, the cumulative arrivals till November 22 were over 42.60 lakh bales.
