Cotton prices seem to be bottoming out with some kind of demand kicking in from the spinning mills at the lower end of the prices, trade sources said.
Cotton prices, which had touched a seasonal low of ₹53,000 per candy (of 356 kg) on lack of demand, are ruling steady and gained marginally with the purchases of raw cotton at minimum support price (MSP) by the Cotton Corporation of India (CCI) lending some support.
Raw cotton or kapas prices are ruling between ₹6,500 and ₹7,000 per quintal across the country, much below the MSP of ₹7,521.
Cotton prices are under pressure, despite a lower crop being estimated on fall in acreage this season. The lack of demand from mills coupled with fall in cottonseed prices is weighing on raw cotton prices. Cottonseed prices, which were in the range of ₹3,600-4,100 per quintal across various markets at the beginning of the season, are now down to ₹3,000-3,500 levels on fall in demand.
Good quality
The daily arrivals of the fibre is slowly picking up and is hovering around 1.6 lakh bales. In absence of adequate demand from mills, over half the market arrivals is being procured by CCI at MSP, sources said.
“Of late there is some demand coming in at the lower level prices,” said Ramanuj Das Boob, a sourcing agent for multinationals and domestic firms in Raichur. Cotton prices had touched a low of ₹53,000 per candy recently from the seasonal start of ₹57,500 levels and have seen some recovery of around ₹500-1,000 per candy in the past two days. Prices are now ruling at ₹53,000-54,000 per candy.
Das Boob said prices appear to be bottoming out and it’s a good level for the millers to purchase at these levels. Since the quality of cotton has been good in Raichur and Adoni regions this year, millers from the North have been buying from the region. In North India, the production was down this year on dip in area.
“Farmers in Gujarat are holding back cotton at the current prices. As a result, ginning activity is slow. Some ginners are getting cotton from Maharasthra and Karnataka,” said Anand Poppat, CEO of Cotyarn Tradelink in Rajkot. Poppat futher said prices have bottomed out and unlikely to go down from the current levels.
Slack yarn demand
Das Boob said the buying by mills in South is slow on lack of demand for yarn and tight liquidity. Also, the dip in ICE futures has prompted the multinationals to stay away from the market, he said.
“This season is not in favour of farmers, nor the ginners or the spinning mills. Farmers are reluctant to sell and are waiting for the price to move up,” said Pradeep Kumar Jain, President of Khandesh Cotton Gin/Press Owners and Traders Association in Jalgaon. Kapas prices are ranging between ₹6,500 and ₹7,000 levels in Maharashtra. “Farmers want ₹7,500 or more per quintal, but ginners are unable to pay because of the current market conditions. Difficult to predict the market as there is no support,” Jain said.
The Cotton Association of India, the apex trade body for the sector, has projected a 7 per dip in output at 302 lakh bales (of 170 kg each) for the 2024-25 season. CAI has pegged the consumption flat at 313 lakh bales. The cumulative arrivals till Nov 22 stood at over 42.60 lakh bales, per CAI data.