Domestic Cotton Cake Gains Over Previous Week, Prices Likely To Appreciate Further

Cotton markets ended the week on a strong note. Cotton cake prices were down during the early part of the week and posted a decent recovery as the week ended. Rising cotton seed as well as cotton oil prices has favored the oil cake market in the last few trading sessions.

Cotton cake had broken the 3000 mark comfortably during the first week of January. Prices were in an upward trend during the second half of 2021 mainly from strong domestic demand and positive cues from the overseas cotton markets. Easing of the new season arrival pressure of cotton seed (Kapas) also favored the upward price action. When comparing the December 2020 end prices with that of December 2021 prices, cotton cake prices had gained by 35 percent approximately.

In India, cottonseed oil cake is largely used as cattle feed as it comprises nearly 25% of protein content, therefore a good source of nutrition for cattle. Cotton seed oil cake consumption by cattle helps increase viscosity to the milk (for human consumption).

As a result there is a wider usage in cattle feed in India. Higher percentage of protein in Cottonseed oilcake is another factor supporting the usage of this product in the animal feed. India’s milk consumption is on the rising trend and likely to maintain the trend in future, therefore the domestic cotton seed oil cake market is bound to grow in years to come.

In context to the derivatives market the March contract of NCDEX was up approximately 4.2 percent week on week. In the major markets of Akola and Kadi, cotton cake (NCDEX specified grades) was traded between Rs.3225-3300/qtl on Friday, up Rs.50-60/ qtl over previous Friday’s offers. Against the estimated production of 345 lakh bales of cotton for the current season, the traders are expecting only 300-310 lakh bales and so whenever prices fall sharply, they are aggressively buying the commodity, on fears of getting the commodities at a much higher price in near future.

This should prevent the primary price direction upwards in coming weeks. Market talks indicate that buyers will be ready for fresh deals in the major markets this week, in case they receive discounts of Rs.25-30/qtl from the prevailing offers.