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Lack of demand for cotton impacts arrivals

Due to subdued arrivals, cotton prices are ruling high on subdued arrivals across the country. Lack of demand in apparels industry has impacted arrivals and although farmers are getting high prices, they are preferring to hold back because of the currency shortage.

Although the country has contracted some 6 lakh bales for export to countries like Bangladesh and Vietnam, traders are finding it difficult to meet contractual obligations because there is no cotton in the market, MM Chokalingam, Director, Marketing, Cotton Corporation of India (CCI) claimed. According to him, prices are playing in the range of Rs 5,200 per quintal while minimum support prices are priced at Rs. 4,160 per quintal. This is because some traders are still offering old currency notes to farmers. Some clarity will emerge by the month-end once the currency issue closes. Till then, prices will continue to remain high. India is the world’s largest producer of cotton and also the second largest exporter. The present cash crunch is leading to delays in sales of cotton and is creating shortages in the domestic market as well as reducing supplies to the global market, the International Cotton Advisory Committee (ICAC) said in its latest report.

Chokalingam says cotton arrivals are presently in the range of 1.20 lakh bales across the country on a daily basis. Given existing cotton prices, there is little need for the Corporation to go in for MSP operations. International rates are higher by 4-6 cents than the domestic market, but traders do not stand to gain since they are unable to supply cotton as per the contract.

Last year, Pakistan turned out to be the biggest importer having exported some 20 lakh bales from India. This time, however, because of border tensions, cotton export to the country has been affected, industry people maintained.

Bangladesh has contracted some 2 lakh bales, China the same amount while Vietnam could import some 1 lakh bales from India. Concerns were expressed in the industry that the supply crunch had driven up prices higher than international prices and since the traders are unable to meet obligations, buyers could look to other markets.

India is the world’s largest producer of cotton and also the second largest exporter. The present cash crunch is leading to delays in sales of cotton and is creating shortages in the domestic market as well as reducing supplies to the global market, the International Cotton Advisory Committee (ICAC) said in its latest report.

 
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