Cotton Corp resorts to purchase cotton at market rates to ensure supplies

The state run Cotton Corporation of India (CCI) a premier organization under the Ministry of Textiles has resorted to commercial purchase of cotton at market rates from various parts of the country to ensure supplies for its customers in the textiles industry.

MM Chockalingam, CCI’s Chairman and Managing Director (in-charge) said that after a gap of almost four years, they have made a small beginning and have purchased about 1,000 bales (of 170 kg each) so far, at commercial rates, from various centres even as cotton trades firm on lower arrivals due to the impact of the currency crunch. They expect to purchase up to 15 lakh bales in the current season.

CCI has been purchasing kapas or raw cotton from markets wherever the prices are lower, Chockalingam said, adding that the commercial purchase of up to 15 lakh bales would be mainly from the West, Central and Southern parts of the country as prices in the Northern markets are ruling much higher.

Kapas prices are ruling between ₹4,900 and ₹5,300 a quintal in various markets. They expect the prices to soften a bit from next month, while ruling out a drastic fall. Further, they see a very slim possibility of the CCI taking up procurement operations at the MSP this year as prices were unlikely to drop below the support price levels on account of the tight demand-supply scenario.

The Centre had announced an MSP of ₹4,150 per quintal for the current season for the long staple fibre and ₹3,860 for the medium staple length.
Besides protecting cotton growers’ interests, CCI also caters to the needs of its customers, such as the National Textiles Corporation and several co-operative mills. It also meets the demand of private sector mills, mainly during the lean season, by releasing the fibre from its stocks.

Over the last three-four years, CCI has stepped into the markets to protect farmers when prices fell below the minimum support price (MSP) levels. But this year, cotton prices have been firm at the start of the season on account of lower arrivals. In fact, in the immediate aftermath of demonetisation, cotton prices spiked, even surpassing the global prices, as farmers temporarily held back their produce.

Though the Indian cotton acreage had dropped by close to a tenth this year to around 11 million hectares higher yields, on account of widespread rains in key producing States, it is expected to help maintain output.

The Cotton Association of India, expects the output to be around 336 lakh bales, marginally lower than last year’s 337.75 lakh bales.

While, the Cotton Advisory Board has pegged the output at 351 lakh bales for the 2016-17 season starting October. Similarly, the International Cotton Advisory Committee expects the cotton output in India this year to remain unchanged at 5.8 million tonnes from 2015-16.