Farmers happy as cotton prices go north on lower stocks

The cotton farmers seem to be happy as the ensuing kharif harvest season will begin on a good price note. Coupled with low carry-over stockpile and better export prospects, the prices of cotton have firmed up in the market. The cotton prices as on September 5 in the domestic market floated at around 22,349 for a bale of 170 kg cotton. Last year the price was 20,246 in the same period.

Moreover, the optimism in cotton prices is mainly driven by higher MSP, minimum support prices coupled with a strong demand situation and record low carry-over stockpile.

In its recent statement, the International Cotton Advisory Committee (ICAC) said that the 2018-2019 season is likely to witness 3 percent drop in production, 3 percent increase in consumption and 10 percent decrease in global stocks. ICAC mentioned that this will bring down the world’s cotton reserves to a level not seen since 2011-2012.On this,  the global apex body said decrease in the stocks world over will mainly come from a draw-down in China’s warehouses.

The Cotton Association of India (CAI) had previously predicted domestic stocks at the end of 2017-2018 season at 22 lakh bales, which is the lowest in about a decade. A cotton trader from Ahmedabad said “at around 20-22 lakh bales of carryover stock, India is having its lowest stock in the past ten years. He added that the trend is similar worldwide, resulting in further increase in prices.