MNCs in India begin offloading cotton
Global prices drop with May cotton futures on ICE easing to 84.5 cents now from 103.80 on Feb 28
As the cotton futures on InterContinental Exchange (ICE), New York, ease on muted global demand and prospects of a better crop in countries such as Australia and Brazil, multinational trading companies in the Indian market have started offloading their stocks procured earlier in the season, trade sources said.
The May cotton futures contract on ICE, which touched a high of 103.80 cents on February 28, has eased to 84.5 cents currently. The December 2024 contract on ICE is hovering around 82 cents.
Trade sources said the international prices have eased by 1718 per cent from the highs seen recently, on weak global demand led by countries such as China, while the domestic prices are also down by 89 per cent from their recent highs.
“There are not many buyers in the market. Demand is there but the movement is very slow. Multinationals have started selling for the April, May, June and July delivery.
PRICES DOWN
This is mainly on decline in ICE futures and low demand,” said Ramanuja Das Boob, a Raichurbased sourcing agent for domestic mills and multinationals and vice president of All India Cotton Brokers Association.
Cotton prices are hovering in the range of ₹60,00062,000 per candy — about three per cent lower than the prices, a month earlier.
Cotton sold by multinationals such as Viterra, COFCO International and Louis Dreyfus Company among others is being bought by traders and mills,
Das Boob said. There are enough stocks with the Cotton Corporation of India, ginners and traders, even as the market arrivals of the raw cotton has slowed down in states such as Maharashtra and Gujarat. Daily arrivals across various States are around 50,00060,000 bales of 170 kg each. In Maharashtra, arrivals are 25,000 bales, while in Gujarat it is around 20,000 bales and in Karnataka around 3,000 bales. CCI, which has procured 32.84 lakh bales (of 170 kg) each at minimum support price for the 202324 crop season has so far, sold some 5.12 lakh bales. The stocks with CCI are at 27.72 lakh bales.
Pradeep Jain, President, Khandesh Gin Press Factory Owners Association in Jalagon, said arrivals are negligible and the demand is poor. Farmers may not have cotton left to sell or they could be holding back expecting better prices. “Farmers and ginners are not happy this year as prices have not been lucrative,” he said.
The Khandesh region, accounts for about a fifth of Maharashtra’s total production of about 1 crore bales, Jain said adding that farmers in the region could be having some 1015 per cent of the stocks left.
CAUTIOUS BUYERS
Das Boob said most of the North Indian cotton mills are covered for the next six months. Mills are also buying needbased because there is no bulk movement of yarn. “Buyers are very cautious because not much demand for yarn at higher prices. They are covering whatever is required keeping minimum stock of one or two months. Also there is no price parity for exports, while lot of international sellers mainly from West African region are keen to sell for the Indian market,” he said.
According to Sushil Phutela, Director, Indian Cotton Association Ltd in Punjab, though domestic prices are down, there’s some shortfall in supplies in the North Indian market.
The Committee on Cotton Production and Consumption (COCPC), an apex body set up by the government comprising cotton textile mills, growers, traders and officials, recently raised its crop production estimates for the 202324 season to 323.11 lakh bales each from its earlier projection of 316.57 lakh bales.