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Increase in prices causes early import of cotton

This year, high domestic prices have forced the industry to begin the import of cotton early. In December, already about 3 lakh bales of the commodity have been imported. Usually, imports start around April/May when domestic prices start escalating.

However, this year as arrival of cotton has fallen post the note-ban and farmers are not selling cotton in a big way as they prefer to deal in cash, the prices og the commodity have firmed up to Rs 39,000 per candy of 355 kg in the domestic market. According to Cotton Corporation of India (CCI) data, season’s total arrival from October to December so far has reached 7.5 million bales, denoting a drop compared to the 10 million bales in 2015. Mills of South India are importing cotton from West Africa as it is comparatively cheaper than Indian cotton by almost Rs 6,000-7,000 per candy.

According to industry sources, cotton prices may not fall in the near future as daily arrival is still below expectation. Currently, cotton arrival has registered at 150,000 bales a day where it should be about 225,000 bales at this time of the season.

Briefed Shirish Shah of Bhaidas Karsandas Company and member of Cotton Association of India (CAI), post demonetisation, prices of cotton have gone up and against it, supply has decreased as farmers are not selling cotton in a big way. Note ban created cash shortage and as most of the farmers prefer to deal in cash, it disturbed the arrival of the commodity. On the other hand, international prices are ruling lower than domestic cotton prices. This has encouraged the mills to import early this year.

After demonetisation, several mandis are also not fully operational, as arrivals have come down. Short arrival at the time of peak season helped escalate the cotton prices to Rs 39,000 per candy. Internationally, cotton prices are being quoted at Rs 33,500 per candy.