Cotton rises in sync with New York futures rate
The spot cotton prices of Gujarat 29 mm fibre length cotton increased by 2.7 per cent in a week.
Commodity Summary MCX
The spot cotton prices of Gujarat 29 mm fibre length cotton increased by 2.7 per cent in a week – between May 20 and May 27 -- from Rs 44,400 per candy of 356 kg each to Rs 45,600/candy.
Pasha Patel, chairman, Maharashtra Commission of Agricultural Cost and Prices, said, “We have recommended a 15 per cent increase in cotton MSP for 2019-20.”
A Vidarbha broker, who didn’t want to be identified, said, “We expect the government to increase the MSP by at least 10 per cent. Cotton prices can rise further if the MSP goes up.”
Traders and ginners try to hold on to their cotton stocks in May as a weight loss of 2-3 per cent can result in a loss of about Rs 800/candy to Rs 950/candy at current rates. As cotton absorbs moisture, increasing its weight, traders like to wait till the onset of monsoon to liquidate their stocks “Ginners are not selling cotton to avoid losses caused by reduction in weight of cotton due to moisture loss during a hot May," said J Thulasidharan, president of the Indian Cotton Federation (ICF).
Though Cotton Association of India, which largely represents traders, has pegged India’s cotton production at 315 lakh bales of 170 kg each, ICF has pegged India’s cotton production at 345 lakh bales. As domestic prices have been rising, millers from south India have resorted to importing cotton. As the cost of transporting cotton from Maharashtra to Tamil Nadu is higher than the cost of transporting it from Tuticorin port, they are able to get imported cotton cheaper by about Rs 1,500/candy at mill gate.
Any hike in MSP to be announced by the central govt for the ensuing kharif crop is also expected to drive the cotton prices upward