Delayed arrival of cotton in the domestic market due to rain, coupled with random export enquiry, has led to a sharp increase in cotton prices in one-and-a-half months. This has resulted in windfall gains of 26-28 per cent for traders who purchased the crop in July/August, when the price was hovering between Rs 30,000 and Rs 32,000 per candy(356kg) for MECH 1 variety(long staple), as against the current price of Rs 38,000-41,000 per candy.
Speaking to Business Standard, the joint secretary (honorary) of the South India Cotton Association, A Ramani, said, “There are a few reasons behind the rise in price of cotton — delayed arrival of cotton due to rain in many parts of the country, export enquiry from overseas buyers and hoarding of the crop by ginners and investors, who bought the crop for Rs 61,000 per candy in January, and expect further price rise.”
Echoing similar sentiments, Rentu K Pandaya, managing partner of Siddhi Sales Corporation ,added: “The delayed arrival of cotton has pushed up prices. Besides other factors, improvement in dollar prices is also responsible for the price rise. Also, under OGL(Open General Licence) around 80 lakh bales of cotton has been registered, the deadline for which expires on September 30.”
Protesting against the high cotton prices and terming the Centre's decision to allow cotton exports under OGL during the current cotton season (October-September ) a serious blow to the industry, textile mills have urged the government to allow shipments from January. They are of the opinion if cotton is shipped early in the season, availability in the domestic market would be hit and and prices would be pushed up.
On being asked if the projected cotton production would be affected by rain in some parts of the country, Ramani said: “As per the estimates of the Cotton Advisory Board of India, the total cotton production in the country during this season would be 35.5 million bales, as compared to 32.5 million bales during the previous year. The cotton advisory board has projected the production after taking these things into consideration. However exact data could only be obtained, after surveying the field.”