India's Cotton Cake Prices Likely to Remain Strong in Near Future

Cotton markets began losing the upward steam after the first week of November. Cotton cake on the other hand made a decent recovery ‘month on month’ due to improving buying interest amongst stockists, due to cheaper price levels. Cotton cake was able to muster strength in November as prices below 2500 triggered buying interest amongst stockists.

Cotton markets had appreciated in October while cotton cake could not gain much. Therefore as the broader view is bullish, stockists were active buyers despite weakening cotton prices. Talks indicate that as the new crop arrival pressure eases, trade persons will rush for purchases whenever prices go below 2500. December cotton cake ended the November month with gains of 5.09 percent or 133 points over October closing. On a monthly basis cotton cakes at Akola and Kadi are up Rs.125-150/qtl with prices hovering around Rs.2725-2750/qtl.

Cottonseed cakes are semi-solid material that remains after extracting the oil from the cottonseed. Basically, it is the residual product obtained after the oil is extracted from cotton seeds. Like groundnut, cake expeller-pressed, as well as solvent extracted cottonseed cakes, are available for feeding the livestock population. 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.

The global cotton balance sheets for 2021/22 include higher production and consumption, and slightly lower ending stocks.  The projected global consumption is up 700,000 bales. The world production forecast is 1.5 million bales higher as gains for Brazil, Australia, Pakistan, and the United States more than offset a 200,000- bale decline in Greece following unusually heavy October rainfall.

World ending stocks are projected at 86.9 million bales, 200,000 bales lower than in October, and 2.4 million bales lower than in 2020/21. The broader-based view for cotton is therefore positive from a pricing perspective, which implies that cotton cake prices shall tend to remain in an upward trend in forthcoming weeks.