Cotton Corporation sees gradual pick-up in demand on easing lockdown

Cotton Corporation of India (CCI) said the prices of the fibre crop have bottomed out and expects the demand from the spinning mills to pick up gradually on easing of lockdown.

The State-run CCI, currently the biggest stockholder of cotton in the country, has sold about nine lakh bales over the past one month, said Chairman and Managing Director, PK Agarwal.

“The overall demand, which looked dull a month ago, is gradually improving. The easing of lockdown norms and return of migrant labour are helping mills to restart operations. Mills need cotton and they have started covering. By first week of August, we are expecting more sales in the domestic market,” Agarwal said.

Alternatively, CCI is pushing for cotton exports to major consuming countries such as Bangladesh and Vietnam through the government channel. “We are trying for a big deal with Bangladesh,” Agarwal said. Due to its proximity, India has a logistic advantage in selling to Bangladesh, a major cotton consumer. Bangladesh needs about 90 lakh bales (of 356 kg each) per year of which 30 lakh bales go from India.

Prices and Sales

In June, CCI had heavily rationalised the sale price of cotton to bring them on par with the market and push sales. “There is no question of further reduction in prices. We have increased the price by ₹200 per bale as the international market has also improved and prices have moved up to 63 cents per pound from a low of 59 cents,” Agarwal said.

Over the past one month, CCI has sold nine lakh bales including 1.5 lakh bales from the 2018-19 season. Agarwal said though the response from mills for its discount sale was not on expected lines, sales were still better than the previous month.

At present, CCI is holding a stock of 105 lakh bales, of which 98 lakh bales were procured from the current season and 7 lakh bales from 2018-19. In the current 2019-20 season, CCI has made a record procurement of 105 lakh bales and the purchases at minimum support price (MSP) were still going in parts of Maharashtra and Andhra Pradesh.

Procurement

CCI expects to stop the procurement from August 1 due to tapering of arrivals and pick-up in rainfall. Agarwal said the daily market arrivals are in the range of around 25,000 bales. CCI’s current daily procurement is very nominal at around 1,000 bales in Maharastra and about 2,000 bales in Andhra. CCI may restart procurement from September, if required.

Trade body Cotton Association of India recently revised upwards its crop estimates for the 2019-20 season to 335 lakh bales of 170 kg each from the earlier 330 lakh bales. Sowing for the 2020-21 season is up 22 per cent at 118 lakh ha as on July 24, brightening the prospects for a good crop in the year ahead.



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