CCI procures 33 lakh bales of seed cotton; future purchases in doubt

Despite market dynamics boosting cotton procurement by the government entity, further acquisitions may be hindered during the current season due to seed cotton prices surpassing the MSP.

CCI has predominantly sourced its cotton from Telangana, making maximum purchases from this region. Additionally, the company procured substantial volumes of cotton from Andhra Pradesh, Punjab, Haryana, Rajasthan, and Madhya Pradesh as seed cotton prices dipped below the MSP. Despite Rajasthan being a significant producer in north India, purchasing was limited due to poor quality of the natural fibre. Moreover, while Gujarat and Maharashtra are major cotton producers nationwide, prices consistently exceeded the MSP throughout most of the current season in these two states.

The purchase of seed cotton at MSP could be possible in the current season because of lower prices in the open market. Higher cotton prices did not leave room for CCI to procure in the last two seasons, 2022-23 and 2021-22. CCI had procured 91.89 lakh bales in 2020-21 and 105.14 lakh bales in 2019-20. The pandemic disrupted normal trading activities, which is why the government’s nodal agency stepped in to support cotton-growing farmers.

Market experts believe that CCI might face challenges in procuring cotton for the remainder of the current season. Indian cotton prices have surged by approximately 10-15 per cent over the last month, driven by a sustained uptick in ICE cotton. Specifically, the Shankar-6 variety of seed cotton has seen an increase to ₹7,900-8,000 per quintal, surpassing the MSP of ₹7,020 per quintal. Cotton prices have experienced a dramatic escalation in recent weeks, with Shankar-6 cotton reaching ₹61,000-61,500 per candy of 356 kg.

ALCHEMPro News Desk (KUL)