Cotton to rule above MSP

Cotton prices are not likely to fall below the minimum support price (MSP) in 2006-07 (October-September), despite a bumper crop on robust domestic as well as overseas demand, Subhash Grover, managing director, Cotton Corporation of India (CCI), said.

India's cotton output in 2006-07 is likely to touch 30 million bales (1 bale = 170 kg), against the government estimate of 27 million bales.

In fact, the government has increased the MSP for J-34 variety to Rs 1,775 per 100 kg and that of Sankara 6 or S-6 variety to Rs 2,005 per 100 kg, he said.

"Cotton prices are expected to be around MSP level this year. Only the best quality cotton may sell above MSP level," Grover said.

The presence of CCI in the market would ensure that prices do not fall below MSP, he said.

"We have already commenced procuring cotton in Punjab in the new cotton season," Grover said. CCI, the state-owned marketing agency, had done a record procurement in 2004-05 of 2.8 million bales. However, in 2005-06, it (procurement) fell to 1.35 million bales, which was the second highest procurement.

The fall in procurement is attributed to strong cotton prices throughout the year, Grover said.

In 2005-06 (April-March), CCI's revenues from cotton sales stood at Rs 2,400 crore "" Rs 2,100 crore in domestic market and Rs 300 crore overseas.

CCI is confident of selling cotton in domestic as well as export markets, as the US is likely to report a drop in production and exports this year, Grover said. Demand for Indian cotton is rising in global markets, especially in China.

"There are no quality issues with Indian cotton now and the same is reflected in robust export performance," Grover said, commenting on complaints regarding the quality of Indian cotton in the recent past.

During the cotton year ended September, India exported 4.7 million bales compared with 0.91 million bales in the previous year.