The Cotton Corporation of India (CCI) may be required to purchase a minimum quantity of cotton in the 2021-22 season, as kapa prices are likely to exceed minimum support prices (MSP) for the longest period of time. part of the season. Acquisitions may be required during peak season when prices drop below MSP, senior corporation officials said.
Unlike the 92 lakh bales that were purchased in the 2020-21 season, the CCI may not have to purchase more than 30 lakh bales for the new season, Pradeep Kumar Agarwal, ITC CMD, told FE. Strong demand for cotton and depletion of stocks, in addition to 10% of import duties applied to cotton, have caused prices to rise to Rs 6,500-7,000 / cwt at the beginning of the season.
Although the area under cover has decreased by 6-8%, from 133 lakh hectares last year to 125 lakh hectares in the current season, cotton production will remain high due to good rains and may touch 350-360 lakh of bales. According to JPAC data, the 2020-21 season started with an initial stock of 120 lakh bales and the harvest size was 371 lakh bales with 11 lakh bales of imports, leading to a total supply of 502 lakh bales. The new season can start with a starting stock of 60 to 70 lakh bales.
“CCI will be present in the market to ensure that the farmer does not sell in a hurry. Intervention may be necessary only during the December peak season, when arrivals are high and prices can drop below MSP. Then the CCI may be required to intervene for a short period of 15-20 days, especially in remote rural areas where there are no buyers, ”Agarwal said.
The purchase cannot exceed 30 lakh bundles. Meanwhile, cotton arrivals have started small in the north, with between 800 and 2,000 bales being brought to market daily and these do not meet the corporation’s quality standards, the CCI chief said. “Significantly, this season, along with kapas prices, cottonseed prices are also high and promise good yields for farmers. Seed prices have risen to Rs 4,500-5,000 per quintal compared to Rs 2,500 a year ago, ”he said.
Meanwhile, the US Department of Agriculture has forecast India’s cotton production at 29 million bales (480 pounds), which is unchanged from last month and 2% higher than last year. The harvested area is forecast to be 12.9 million hectares, marginally less than last month and last year due to slow progress or pause in the southwest monsoon and competition from other crops.
According to the India Department of Agriculture’s All India Crop Situation Report dated August 6, planting progress in the central region, which comprises 75% of total production, has dropped by almost 5% compared to the same period last year. North India finished planting cotton in May. Planting in central India should be completed in August. Planting activities have started in the southern region.