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Cotton procurement nearly ceases as prices firm up

Nanda Kasabe
cotton, cotton industry, cotton sector

With prices firming up, the cotton procurement by state-run Cotton Corporation of India (Cotton Corp) has almost come to a standstill. CCI has procured 11.6 lakh bales so far, nearly four times the amount collected during the same period the previous year, top officials said and maintained the cotton body would remain in the market to ensure that prices remain stable. Procurement is likely to touch 15 lakh bales by the end of this season.

Cotton Corp chairman & managing director P Alli Rani said cotton procurement was down but not closed. Prices have firmed up and therefore the purchase under procurement is down, she said, adding the 348 centres are active and will remain open throughout the season to ensure that the market remains stable.

This season onwards, Cotton Corp has introduced stricter quality norms for ginning and processing units in cotton-producing states.

Until now, there was a loophole with regard to trash and moisture content that was exploited by some ginners, market sources said, adding that Indian cotton is of a lower grade as it contains higher trash content and moisture. India is the only exporter which gives trash and moisture guarantees in global trade. India introduced mandatory traceability in cotton a couple of months ago and its implementation was likely to take some time, Alli Rani said. Because of the stricter norms, the inventory with Cotton Corp is good quality and most buyers have expressed satisfaction with it, she said.

She also said Cotton Corp was likely to soon start buying cotton on its commercial account. There is a scope for another 10 lakh bales on commercial account. Of the total procured stocks, around 80% have been purchased from Telangana, followed by Maharashtra. Cotton lower in quantity was also procured from Andhra Pradesh, Karnataka, Madhya Pradesh and Odisha.

The minimum support price for medium-staple variety is at `5,150 per quintal and that for long staple at Rs 5,450/quintal. The government had raised the support price for cotton by 26% this year.Cotton prices in the market are currently in Rs 5,700-Rs 5,800/quintal and are likely to remain on the higher side, market sources revealed. Until now, around 67% of the cotton has arrived in the market this season.

Significantly, the Cotton Association of India (CAI) expects a big drop in the Indian cotton crop figures for this season as there will be no third, fourth or fifth pickings in the country.

According to the CAI crop committee s last meeting on March 1, 2019, the committee has estimated Indian crop size of 328 lakh bales of 170 kg against earlier estimation of 330 lakh bales. Last year, crop size was 365 lakh bales which means India will have 37 lakh bales less crop as compared to the previous season. The current opening stock is 28 lakh bales and arrivals are 213.42 lakh bales till February 28. The import has been around 5.50 lakh bales up to February 28, which means the available crop is 246.92 lakh bales. The consumption has been around 131.66 lakh bales from January 10, 2019, to February 28.