Cotton prices in India hit a seasonal low of ₹53,000 per candy due to lackluster demand but have shown signs of recovery, aided by purchases at the minimum support price (MSP) by the Cotton Corporation of India (CCI). Raw cotton prices remain below the MSP, while cottonseed prices also dropped due to weaker demand. Daily arrivals have increased, with half being procured by the CCI. Market experts suggest that prices are bottoming out, creating an opportunity for millers to purchase. However, weak demand for yarn and tight liquidity have slowed buying in the South, while farmers are reluctant to sell at current rates.
Key Highlights
# Cotton prices hit a low of ₹53,000 per candy this season.
# Purchases at MSP by CCI lent marginal support to prices.
# Raw cotton prices are ruling below MSP across the country.
# Weak demand for yarn and tight liquidity hurt millers' buying.
# Cotton output is projected to dip by 7% this season.
Indian cotton prices touched a seasonal low of ₹53,000 per candy, driven by subdued demand from spinning mills and declining cottonseed prices. Recently, prices have marginally recovered to ₹53,000-54,000 per candy, with support from the Cotton Corporation of India's (CCI) MSP-based purchases. Daily arrivals of cotton hover around 1.6 lakh bales, with over half being procured by CCI, providing temporary stability to the market.
Despite the lower estimated cotton crop this season due to reduced acreage, weak demand continues to pressure prices. Cottonseed prices have also dropped significantly, from ₹3,600-4,100 per quintal to ₹3,000-3,500, further affecting raw cotton rates. However, quality cotton from regions like Raichur and Adoni has attracted millers, while in Gujarat, farmers are holding back stocks, hoping for better prices.
Farmers remain reluctant to sell their produce at current prices, waiting for a rise to ₹7,500 per quintal. Ginning activity has slowed due to tight liquidity and weak demand for yarn. Multinational buyers are staying away, influenced by declining ICE (NYSE:ICE) futures. The Cotton Association of India (CAI) predicts a 7% drop in output for 2024-25 at 302 lakh bales, with consumption estimated at 313 lakh bales.
Finally
Cotton prices appear to have bottomed out, creating buying opportunities for millers. However, weak demand and tight liquidity remain major market challenges.
