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Maharashtra cotton prices improve but remain below MSP

04 December 2019


Wholesale cotton prices in Maharashtra continue to remain below Minimum Support Price ( MSP) levels even as the moisture content in cotton has reduced over time and winter has begun to set in.


Cotton prices improved to Rs 4,500-5,100 per quintal, according to industry people. The prices were Rs 3,500-4,000 per quintal a week ago.Cotton Corporation of India (CCI), which has commenced procurement operations in the state, is paying farmers the MSP price.The MSP of cotton for the 2019-20 season is Rs 5,550 per quintal as against Rs 5,450 per quintal in the previous year. According to Pradeep Jain, president, Khandesh Cotton Ginners Association, arrivals have picked up to around 50,000 bales and CCI purchases around 50% of this.


He expects prices to remain on the lower side this season as the arrivals pick up and attributes the low prices to the lack of demand in the market. Prices have improved to Rs 4,500-5,100 per quintal for traders and there is little demand in the market, Jain said.Not much is happening on the import-export front and the market is functioning on local demand, he added.Jain expects cotton prices to remain below MSP for a better part of the season with arrivals picking up as the season progresses. Cotton prices are currently in the Rs 4,500-5,100 per quintal range. Last year same time, prices were at Rs 6,000 per quintal, he pointed out.


Meanwhile, the Corporation has procured around 6 lakh bales of cotton in the current season that commenced in October, CCI CMD P Alli Rani said.The Corporation has procured around 40% of the daily arrivals on Tuesday as moisture levels have reduced, she said. In Maharashtra, the procurement is being done through the Maharashtra State Cotton Growers Federation (MSCGF), a sub-agent of the Corporation.


The Federation has established cotton purchase centres at Dharangaon, Parola, Amalner, Yaval, Dhule, and Malegaon in Nashik. CCI is setting up purchase centres at Jalgaon, Erandol, Pachora, Jamner, Chopda, Bhusaval, Shahda and Nandurbar.As the weather largely remains sunny in the cotton growing areas, the moisture content in cotton is expected to further reduce. CCI purchases FAQ quality of not less than 12% moisture content levels in cotton. Last year, CCI had procured 10.70 lakh bales under MSP.Cotton prices were down below the minimum support price (MSP) fixed by government in September and therefore CCI had to intervene to purchase in Punjab, Haryana, Gujarat and Rajasthan. The cotton crop in Maharashtra has been delayed, as unseasonal rains damaged around 19 lakh bales in the state. as per market reports.


The damaged crop is estimated to fetch prices that would be 30-35 % lower than the MSP due to high moisture content, said India Ratings and Research report. CCI officials had said India’s cotton production in 2019-20 (Oct-Sep) is likely to be at least 350-355 lakh bales, up nearly 4% from the previous year due to higher acreage and better weather conditions in most of the growing regions. In the last few years, India’s cotton output has averaged around 350 lakh bales.


Cotton Association of India (CAI) has estimated its cotton crop for the 2019-20 season at 354.50 lakh bales of 170 kgs. each which is higher by 42.50 lakh bales compared to the previous years crop of 312 lakh bales.The increase in crop estimated for the 2019-20 season is on account of higher acreage under cotton than that of the previous season. Moreover, the CAI estimates yields to be higher as the country has received a good rainfall this year. However, there are reports of damage to the crop in some pockets due to flooding on account of excess rains. Keeping this in mind, increase in crop is restricted to 13.62%.




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