With India looking at a bumper cotton crop, and presently cotton price of the fair and average quality is ruling above MSP, the government agencies are all prepared to enter the market in case prices touch MSP or fall below minimum support levels, said SK Panigrahi, chief general manager, Cotton Corporation of India (CCI).
However, traders are expecting the prices to remain above MSP till December, except in Telangana. Private procurement currently on in Telangana is below minimum support price. Traders said that the prices are low because the crop has more moisture due to the recent rainfall and they expect better quality and increased arrival post Diwali.
The Cotton Association of India is due to release its crop study report with output estimates in two weeks. The industry expects India's cotton production in 2017-18 to be 375 lakh bales. The International Cotton Advisory Committee (ICAC) has projected global cotton production to rise 10 per cent this fiscal to 25.4 million tonnes.
According a section of traders, even if CCI does MSP procurement operations, it will not be a big one. If production has increased, consumption is also likely to increase.
ICAC has projected increase in global as well as India's cotton mill use. Global cotton mill use is expected to increase at 2.7 per cent during 2017-18 to 25.2 million tonnes, up from 1.6 per cent growth last year.
ICAC said that mill use in China is projected to grow by 1.5 percent to 8.1 million tonnes. Cotton mill use is also projected to grow moderately in India, Pakistan, Turkey, Bangladesh, Vietnam and Brazil.
Cotton arrivals started in Gujarat and Maharashtra 20 days ago. In Khandesh area of Maharashtra, where new season's cotton has started arriving, prices of cotton with permissible moisture levels are above MSP.
Pradip Jain, president, Khandesh Ginners Association said that they believe that cotton prices in Maharashtra may remain higher than MSP at least till December.
However, J Thulasidharan, president, Indian Cotton Federation said that they have requested CCI to procure 30-40 lakh bales of cotton to help the industry during the lean period.
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