Who is killing the cotton farmer?

COMMODITY WATCH

We are in the Aquarian age, the age of unpredictability. The hedging system we proudly create and boast of cannot safeguard the very farmer, the first user of risk management. The farmer was the reason why we created the system in the first place.

In the past 18 months, about 1,200 cotton farmers of Vidarbha (Cotton Bowl of India) have taken their own lives to escape debts to moneylenders. The markets may be award-winning markets, but we were late.

You can blame the farmer's lack of literacy that he could not beat his fate. But political apathy only makes this one of the many events that will miss the cover page. We are busy with more important essential talk of profits.

The poor farmer did not understand the investment and took a safe bet steeping into a drought tolerant field crop. Global prices kept the supply pressure up to lead to the unfortunate incident.

But then you cannot really hate cotton, the fibre followed its natural rhythm as it headed down in a multi-year C wave down. And just like everybody loves equity now, the hate for the crop is also at an extreme. We at OR-PHE-US believe the worse times for cotton might be getting over, just when no one wants to touch the asset at current prices.

We have carried MCX Long Cotton here along with the Dow Jones Cotton Index. MCX cotton has broken a 15-month trend line and the intermediate term still seems negative.

On the other hand, the Dow Jones Cotton Index is finishing a multi-year and a multi-decade bottom. We anticipate supports coming in on the intermediate time frame soon enough. Till MCX Long Cotton does not cross above Rs 18,400, we expect a dip below Rs 16,400.

(Contributed by or-phe-us.com, a global alternative research company)

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