With cotton arrivals picking up in all major cultivation centres, the Cotton Corporation of India (CCI) has started purchases in places where the market price has equalled the Minimum Support Price (MSP).
According to CCI-director (marketing) M.M. Chokkalingam, the corporation is purchasing approximately 15,000 bales a day now. “The plan is to buy 100 lakh bales this year at both MSP prices and [through] commercial purchase,” he told The Hindu .
Production is expected to exceed 385 lakh bales of cotton this year and prices are expected to come under stress especially for Shankar 6 (grown in Gujarat), Bunny/Brahma varieties (Andhra Pradesh, Telangana, Maharashtra, and Karnataka). “The arrivals are nearly one lakh bales a day now. The prices are already down and will drop drop further when the arrivals touch two lakh or 2.5 lakh bales a day by the end of this month,” he said.
Moisture concerns
Trade sources here added that the cotton that is coming to the market now has slightly higher moisture content, especially in Telangana and Andhra pradesh. Purchases by textile mills may be impacted if the moisture content is high.
The minimum support price for Shankar 6 is ₹4,270 a quintal and for BB varieties, ₹4,320 a quintal. The market price of Shankar 6 is ₹10,545 a quintal and that for BB varieties, ₹10,798 a quintal.
Last year, market prices had been higher. The MSP is not adequate and Gujarat has announced a bonus price over the MSP if CCI commenced purchasing. Maharashtra and Telangana are also expected to announce a bonus amount if there is intervention by the CCI, the sources said.
Mr. Chokkalingam added that in 2014-2015, CCI had purchased 86 lakh bales. Last year, its intervention in the market was not much as prices were high. This year, it has got the approval of the government to go up to 100 lakh bales. If prices stabilise and the need for MSP operations decline, CCI might purchase less than 100 lakh bales, he said.
