Amid fears over lower cotton yield this season, Cotton Corporation of India (CCI) is set to enter Punjab and Haryana markets within a week for buying crop, a move which will curb wide variation in cotton prices.
As crop arrival in both states was still low due to higher moisture level, North-based spinning mills are refraining from aggressive buying for inventory creation in the face of high cotton rates.
The total cotton arrival in Punjab and Haryana has just reached 1.22 lakh bales, which is way behind the arrival of 3 lakh bales in both states in corresponding period of last season, traders said.
Though CCI, which is a nodal agency of Ministry of Textiles, has not yet decided how much crop it will buy from Punjab but from Haryana it is eyeing to lift 1 lakh bales in the current season, a senior official of CCI said.
"We will start buying crop from next week for commercial operations," a senior official of CCI, Punjab said.
The entry of CCI in the market is expected to bring stability in cotton rates, which are showing wide movements on daily basis, the agency official said.
"Once we enter the market, there is going to be stability in (cotton) rates, which are currently moving up and down," he said.
According to traders, within almost a week, the cotton rates moved up from Rs 3,620 per maund (37.324 kg) to Rs 3,720 per maund. Moreover, there is a variation of Rs 20 to 30 per maund on daily basis in rates.
CCI bought 97,000 bales and 31,000 bales from Punjab and Haryana, respectively last year.
Chastising Centre for allowing cotton export that has led to a jump in cotton rates, spinning mills in Punjab and Haryana are not making any bulk purchase to cut down their input cost.
"We are buying for our daily requirements and we are not creating any inventory due to high prices," Vardhman Textiles Corporate General Manager I J Dhuria said.
The total requirement of spinning sector in Punjab and Haryana is pegged at 55 lakh bales per annum.
Not expecting dip in cotton rates till December this year due to cotton export, spinning mills said that their operating margins are going to be hit as hike in cotton rates are not being absorbed in cotton yarn prices.
