Cotton spot prices in India are likely to remain higher than global prices due to better quality and lower output in the last season, traders, including Cotton Corporation of India, the federal nodal agency for price support operations, said. The commodity’s prices in India has bucked the global slump in the current financial year due to the US-China trade war. Cotton spot prices have mellowed globally in the current financial year whereas local factors, including lower-than-estimated cotton output in India, has kept the domestic prices firmer. The higher prices have affected exports curtailing the cotton yarn shipment by 22% in the current financial year.
Indian spinning mills have sought the release of CCI’s stock at a discount to ease the domestic prices. At present, the price of CCI’s cotton is over and above the market price due to its quality. “The cotton stock with the CCI is of higher quality than what is being imported. There is no parity in prices,” a senior official of Cotton Corporation of India said. The CCI has stock of over 9 million bales from the last season bought at MSP and commercial rates from farmers, the official said. Over 800 buyers are listed with the CCI to purchase cotton through auctions. Cotton output in India has been revised to 312 lakh bales in June compared to 348 lakh bales in October last year for 2018-19 cotton marketing season, according to the Cotton Association of India.
“Domestic factors are supporting the cotton prices and a weak monsoon in the current season is also keeping the prices above the global prices. Global prices have shown a revival in the last few days,” a senior executive at Cotton Association of India (CAI) said. “Indian cotton output was affected as the third and fourth round of cotton-picking in states of Telangana and Andhra Pradesh has been negligible due to unfavorable weather,” the CAI official said.
