India’s cotton exports gains momentum; prices likely to go up

PUNE: India’s cotton exports have gained momentum as Indian cotton is currently the cheapest in the world. Cotton Corporation of India, which is holding the largest stocks in the country, has sold close to 5 million bales of cotton in the past two months, a lot of which has been shipped abroad by private traders.

“Cotton exports have been sharply up and hence we expect prices to move upwards in the coming week. Due to excess rainfall, there is more moisture in cotton and arrival of good quality cotton has been delayed, giving support to the prices,” said Gnanasekar Thaigarajan, director, Comtrendz Research.

Cotton trader Dinesh Hegade said there is tremendous demand for organic cotton from Bangladesh. “Bangladesh has a huge requirement of both organic and non-organic cotton. But we will not have organic cotton available till the new crop is harvested,” said Hegade.

Pradip Jain, president, Khandesh Ginners’ Association, said: “There has been about 10% loss of the crop due to heavy rainfall. But it is likely to be recovered as higher moisture levels in soil will help to increase production during later pickings. The crop will be delayed by about 15 days more than the normal time.”

Cotton Corporation of India was holding nearly a third of the cotton that had arrived in the country during the 2019-20 (October-September) season. However, it had refused to sell cotton at a loss. Hence it was carrying almost all of the cotton in May. It started offering heavy discounts and selling at a loss since June which helped it liquidate close to 50% of its stocks.

“We have sold 57 lakh bales of 170 kilograms each from the total stock of 115 lakh tonnes. We are confident that most of the remaining stock will be sold during the next couple of months,” said Pradeep Agarwal, chairman, Cotton Corporation of India.

The state-owned company is trying to sign a government-to-government agreement with Bangladesh which is presently being cleared by different ministries.

Cotton Corporation of India is selling cotton at Rs 38,200 per candy of 356 kg each. Small traders and brokers have alleged that its discount scheme on bulk purchases has helped only the big companies and traders, who have benefited by selling this cheap cotton in domestic and export markets.

At the present, cotton prices are ruling much below the minimum support price (MSP), which has been fixed at Rs 5825/quintal. Private traders are likely to stay away from buying cotton when arrivals gather pace from the end of October. Cotton Corporation of India has said that it is all set to purchase cotton in the north while it will begin preparations from October 1 for MSP operations in southern India.

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