Total cotton arrivals in the market till November 21 amounted to seven million bales, one million bales more than in the year-ago period, according to the CAI.
“After having a sluggish market for three years, there are many positive indicators that support a firm trend in cotton prices. Cotton supply will not be surplus this year, as demand is reviving while supply will be smaller than expected earlier,” said Pradeep Jain, president, Khandesh Ginning and Pressing Association.
Cotton prices also received support from the increase in prices of cotton seed used to produce oil, which moved upwards in tandem with prices of the edible oil complex.
“Along with other reasons, increase in prices of cotton seed by about 10% has supported the increase in cotton seed prices,” said Atul Ganatra, president, CAI.
The government agency Cotton Corporation of India has begun cotton procurement in 10 states, which led to an increase in open market prices. The minimum support price for long staple cotton is Rs 5,825 per quintal for kharif 2020.
Increase in prices may hit exports in the short term.
“India shipped 7 lakh bales in October. We were expecting to export 8-9 lakh bales in November which may decline to about 5-6 lakh bales as our prices have increased,” said Ganatra.
However, Bangladesh, the biggest buyer of Indian cotton, will continue to buy Indian cotton. “Thanks to the shortest lead time due to the proximity of the two countries, Bangladesh will continue to import Indian cotton,” said Sultan Riaz Chaudhury, president Bangladesh Cotton Association.