Cotton prices rise on delay in new crop

The monsoon has brought cheers for cotton farmers with prices touching a four-year end-of-season high of Rs 48,500 per candy of 356 kg. The previous high was Rs 47,800 per candy in September 2013. The withdrawing monsoon has led to a rise in prices, interrupting supply for a fortnight.

"Recent rains may delay new cotton arrival by 15 days or more. Generally, around this time new crop starts arriving but due to recent rains quality cotton arrival will now begin by October-end. Supply was already tight… These reasons led to rise in cotton prices," said Chirag Patel, chief executive officer, Jaydeep Cotton Fibers.

However, the price rise has not benefited farmers in terms of realisations. According to experts, farmers will begin to see better realisations on their produce once the new supply begins.

"Most farmers sold their cotton by April-end. Farmers haven't been able to make any profit from recent price rise. Currently, ginners and stockists are carrying cotton stock. However, farmers will get good price at the beginning of new season of cotton due to the current price jump," said Arun Dalal, leading cotton trader from Ahmedabad.

New cotton arrival has begun in Punjab. About 3,000 bales (170 kg each) of cotton have been arriving every day since last one week and all the stocks have been consumed by yarn mills in north India.

Their southern counterparts, however, prefer to buy from Gujarat and Maharashtra where new crop is yet to come.

Bhagwan Bansal, president, Punjab Cotton Ginners Association said, "New crop arrival has started in north India and quality of crop is good. Prices are already high due to short supply. Still, we have to wait for a month for the best supply."

In Punjab, new cotton prices are being quoted at about Rs 43,500-43,800 per candy. According to Bansal, cotton prices may decline after second week of October when arrivals in all cotton growing states begin.

"This year, opening season prices could be Rs 43,500 per candy in October, compared with Rs 34,000 per candy last year," said Patel.

According to Religare Commodity research report, even as weakness was noted in the international markets, domestic prices firmed up on lower sowing. Even a strong temporary fall in global markets failed to affect the bullish Indian markets. The uptrend is likely to continue for the time being till new crop arrivals start.

As per agriculture department data, cotton sowing was done on 10.22 million hectares as on September 16, down by 9 per cent from 2015. According to the first projection by Cotton Association of India (CAI), cotton production would be 33.60 million bales for 2016-17, marginally lower than 33.77 million bales in 2015-16.