The Cotton Corporation of India (CCI) has commenced procurement of cotton in Punjab and Rajasthan since prices of the crop have come under pressure in these states.

P Alli Rani, CMD, CCI said purchase has begun in the North after a gap of nearly three years after the government has given permission for direct purchase of the crop. The procurement is in minimal quantities because the moisture content is high, she said.

The farmers have been advised to dry the cotton before bringing it to purchase centres, she added.

CCI has quality parameters of 12% moisture and at present the moisture content is on the higher side. Last year, CCI had procured 10.70 lakh bales under MSP. If prices remain lower than the MSP in all states, then it may procure more cotton than last year, Alli Rani said. The MSP of cotton for the 2019-20 season is Rs 5,550 per quintal as against Rs 5,450 per quintal in the previous year.

Prices of raw cotton or kapas are currently ruling between Rs 4,700 and Rs 5,250 per quintal, depending on the quality and the moisture content. However, the prevailing prices are much below the minimum support price (MSP) of Rs 5,550 per quintal announced by the Centre.

At present, daily market arrivals are at around 40,000 bales in North India, while in Telangana they are at around 2,000-3,000 bales. In Maharashtra, the daily arrivals are at around 3,000-4,000 bales and in Karnataka at around 1,000 bales, according to market sources.

Arrivals are set to pick up by the end of October or early November.

CCI is geared up for procurement of as much as 100 lakh bales of cotton from farmers in the cotton season of 2019-20 after Diwali. Alli Rani said that cotton prices are expected to fall after Diwali when arrivals pick up. At present, arrivals are negligible and do not meet the quality parameters of the agency of 12% moisture.

“Arrivals have begun in Madhya Pradesh but the moisture content is high so CCI will not be able to make purchases, she said, adding that CCI is prepared to buy even today but the moisture content levels are high. The agency may have to intervene in the market in November. It has established 358 procurement centres this year.

The highest procurement by CCI so far has been in 2014-15 when the agency had procured around 96 lakh bales. “The following years have been no MSP years and in the last season as well, prices have been 28% higher than MSP. CCI purchased barely 10 lakh bales during that season,” she said.

Rani said India’s cotton production in 2019-20 (October-September) was likely to be at least 350 lakh bales, up nearly 4% from the previous year due to higher acreage and better weather conditions in most of the growing regions. In the last few years, India’s cotton output has averaged around 350 lakh bales.

The International Cotton Advisory Committee (ICAC), in its cotton summary for October 2019, has noted that global production — projected at about 268 lakh tonne — is expected to slightly outpace global consumption, projected at 265 lakh tonne, for 2019-20, which began from August.

This is likely to put downward pressure on global cotton prices — a trend that may affect India’s cotton market too.

Cotton Association of India (CAI) data showed that India’s cotton exports were 36 % lower, at 44 lakh bales, till September 30, while its imports almost doubled to 29 lakh bales.On global consumption, ICAC estimates that “even the major cotton consuming countries may see tepid growth in consumption, at about 2% over last year.