Pune: The Cotton Corporation of India (CCI), the government agency which is presently holding close to one third of the country’s cotton stocks, has slashed the price of its cotton to promote sales.
This has made domestic cotton cheaper than the imported cotton, however, large availability of cotton in the current year and forecast of a big crop ahead has kept the buying subdued.
Though the price cut has made cotton attractive for the cotton based industry, it may not result in significant off take for CCI.
“The present price offered by CCI is very attractive. However, as the millers are running at only 20% to 40% of their full capacity and have stocks for next two to three months, the actual buying of cotton from CCI is going to remain less,” said K Selvaraju, secretary general, Southern India Mills Association (SIMA).
Atul Ganatra, president, trade body Cotton Association of India (CAI) thinks that the uncertainty in CCI’s price policy is also holding the buyers back.
“The CCI is changing the prices every fortnight. A stable price policy for a longer period of time will be helpful for the traders and millers,” said Ganatra. CCI has reduced cotton prices by Rs 600/candy to Rs 1500/candy (a candy of 356 kilograms each), said traders.
“Demand for cotton is likely to increase in coming days from domestic as well as from international markets as Indian cotton is very cheap compared to the world market. The good thing is that the Indian mills will be able to avail good quality cotton at cheaper rates for next 6-12 months,” added Ganatra.
CCI and its agencies have procured 1.25 crore bales of cotton in the current year, which is close to one third of the cotton arrivals in the country.
Cotton industry and trade had been demanding that the CCI slash its rates, while CCI had refused to oblige, saying it had quoted the right price for its premium quality cotton.
“Cotton market runs on sentiments and the present sentiment in the market is that the CCI will have to ultimately come to the buyers to liquidate its stocks. Due to timely arrival of monsoon and increase in the minimum support price of cotton, farmers are not likely to cut the area under the fibre crop,” said a cotton broker, who did not want to be identified.
Source: indiatimes.com