Gujarat cotton season opens with higher prices

Gujarat cotton season opens with higher prices

Delay in arrival, good demand from mills and higher minimum support price (MSP) have ensured that the new cotton season in Gujarat opens with higher prices this year. Cotton prices are about 20% higher as compared to last year (2017-18).

New cotton prices in Gujarat are at Rs 46,200-46,500 per candy of 355 kg this year in mid-October as compared to Rs 38,500-39,000 per candy in the corresponding period last year. According to traders and market experts, prices may not fall in the near future. Instead, prices could even rise.

“Due to good yarn exports during last season, at this time, mills do not have cotton stock. Moreover, rupee depreciation has made Indian cotton cheaper, which will encourage exports demand in coming days, and the government has hiked cotton MSP. All these factors have changed the sentiments in new season and as result, cotton prices have opened higher as compared to last year,” said Arun Dalal, a leading cotton trader from Ahmedabad.

For the long staple variety, MSP has been increased 26.16% to Rs 5,450 per quintal, while for the medium staple, it has been hiked 28% to Rs 5,150 per quintal.

Currently, daily arrival of new cotton has reached to about 55,000 bales (a bale of 170 kg) in India and about 10,000 bales in Gujarat. According to traders, arrivals of cotton are likely to touch 70,000 bales across India and 15,000 bales in Gujarat.

However, Gujarat may face see reduction in yield due to unfavourable climate during monsoon.

Dalal said, “Gujarat may witness 532 kg per hectare yield this year as against 619 kg a hectare. As per our estimate, cotton production for the year 2018-19 could be about 8.5 million bales as against 9.6 million bales in 2017-18. All this is because of irregular monsoon in the state.”

As this year’s sowing started late due to delayed monsoon, arrivals of new cotton aren’t in full swing. Moreover, since October is a month of festivals, it has also restricted farmers to sell cotton in a big way. According to cotton ginners, full-fledged arrival will start after Diwali.

Arvind Raichura, director of Balkrishna Ginning and Pressing Factory, said, “As expected new cotton arrivals are slow this year and the reasons for that are late-sowing and less selling by farmers due to festivals, we are expecting full-fledged arrivals only after Diwali.”

Source: Financial Express