The Cotton Corporation of India (CCI) recently started procuring cotton in Punjab and Rajasthan as prices have come under pressure there. Purchase has begun in the north after three years after the government permitted direct purchase of the crop, but the procurement is in minimal quantities as the moisture content is high, said CCI chairman P Alli Rani.

The farmers have been advised to dry the cotton before bringing it to purchase centres, Rani, also the managing director of CCI, said. CCI quality parameters warrant 12 per cent moisture in cotton.

Last year, CCI had procured 10.70 lakh bales under the minimum support price (MSP). If prices remain lower than the MSP in all states, then it may procure more cotton than last year, Rani said. The cotton MSP for the 2019-20 season is ₹5,550 per quintal as against ₹5,450 per quintal in the previous year.

Prices of raw cotton or kapas are currently ruling between ₹4,700 and ₹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 ₹5,550 per quintal announced by the government.

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 a report in a leading financial newspaper.

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. Rani said cotton prices are expected to fall after Diwali when arrivals pick up.Though arrivals have started in Madhya Pradesh, CCI cannot procure as the moisture content is high, she said.The agency may have to intervene in the market in November. It has established 358 procurement centres this year.Rani said India’s cotton production in 2019-20 (October-September) was likely to be at least 350 lakh bales, up nearly 4 per cent 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.