Halt in purchase by Cotton Corporation of India tests the nerves of farmers waiting to sell at better prices.
Cotton arrivals in October were 1.48 million bales, compared to 2.1 million bales in the same month last year (a bale is 170 kg). This year’s production is expected to be an all-time high of 35.5 million bales, compared to 32.5 million last year.
“Hoarding is on. Last year, farmers had received a good price and now, too, they hope prices would pick up,” said A B Joshi, textile commissioner for the Union government. Rain towards the end of the monsoon season in Saurashtra had also affected arrivals, traders said. On the spot markets, daily arrivals are 80,000 to 90,000 bales.
“Farmers have been hoarding, but this practice will stop in the next 15 days and arrivals are expected to increase on the spot markets. Also, despite farmers’ hoarding, cotton prices have not shot up; they are falling,” said Arun Dalal, an Ahmadabad-based trader.
The price of cotton on the spot markets was Rs 39,600 a candy (356 kg) last week; it is now Rs 37,600 a candy. The Cotton Corporation of India has stopped buying cotton from the market. This will test the nerves of farmers waiting for a higher price. Sources in the corporation said as the arrivals are expected to go up and domestic demand is slow, their buying will begin when prices reach a reasonable level.
In February, the price of the benchmark Shankar-6 variety went as high as Rs 63,000 a candy. Traders expect prices to fall by another Rs 2,000 a candy in the next fortnight. Higher arrivals will also begin to weigh on prices, traders said.
This year, there is no cap on cotton exports. Last year, exports were initially capped at 5.5 million bales and later another million bales were allowed. “This cotton year, 1.5 million bales have been exported so far and two mn bales have been registered for export by December,” said an exporter.