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Cotton prices may rise

Prices of Indian cotton are expected to rise in the near to medium term as the minimum support price (MSP) for kharif crops is likely to be revised and a deficient monsoon will affect sowing of cotton. Cotton prices touched a four-year low as they dipped to Rs 13,990 per bale in the third week of January. In 2014-15, cotton prices have been falling continuously because of higher production and a lower demand from China. The offtake by China, which used to buy 50 per cent of Indian cotton, came down to 10 per cent this time. Against 11.79 million bales of cotton exported in 2013-14, only 4.5 million bales have been exported till now in 2014-15.

El Nino is anticipated to affect the Southwest monsoon this year and lead to deficient rainfall. If this happens, cotton sowing will be on the lower side and in turn production will be down for the year. This will see prices moving up by June. As the price of raw cotton fell below MSP, the Cotton Corporation of India hiked the procurement of cotton from farmers. CCI has procured over 86 lakh bales of cotton in 2014-15 against 40,800 bales in the previous year.