Insights
- Indian government, through the Cotton Corporation of India (CCI), is expected to procure 10 million bales of cotton this season, significantly up from 3.28 million last year.
- This surge is driven by an increase in the minimum support price, encouraging farmers to avoid distress sales and stabilise the market, even as procurement halts in northern states due to depleted arrivals.
The Indian government’s cotton procurement may reach 10 million bales of 170 kg during the current marketing season of 2024-25 (October-September). The government procurement agency, Cotton Corporation of India (CCI), has assured farmers that it will procure all crops brought to its designated yards. According to industry sources, CCI has already purchased 8.6 million bales of cotton up to last week.
CCI has urged farmers not to resort to distress sales of their produce, as prices are hovering around the minimum support price (MSP). It has assured that it will procure all the produce brought to the designated CCI yards. Trade sources revealed that the bulk of the procurement, nearly 80 per cent, is being purchased by the CCI in several states. However, it has ceased purchasing in northern Indian states where seed cotton arrivals have drastically depleted.
In a message to farmers, CCI assured that it would continue to procure all fair grade cotton until the final arrival. Recently, CCI’s chairman and managing director, L K Gupta, stated that the corporation has procured 8.6 million bales of cotton across the country so far. The procurement for the current season is significantly higher than last season’s 3.28 million bales.
There has been a significant increase in the minimum support price (MSP) at which CCI is purchasing cotton. The higher MSP is the main driver encouraging farmers to come to the government’s purchasing centres. Gupta said, “The procurement is ongoing and is likely to continue until March 15. We will remain in the market as long as farmers are selling cotton at MSP.” Although there were delays in procurement in some areas due to space constraints, these were only temporary.
CCI’s procurement of a large cotton produce has direct implications for the textile industry. Its procurement may reach 10 million bales out of a total estimated production of 30.42 million bales. Ginning mills could not purchase seed cotton due to price disparities as market rates remained lower than the MSP. Therefore, private ginners will have very limited stock for the upcoming non-arrival months.
Industry sources said that CCI normally releases cotton after June. It has sold last year’s stocks in recent months. Additionally, CCI will fix a base price for auction based on the higher MSP. Higher selling prices will boost cotton prices in non-arrival months. However, cotton prices are not receiving support due to price disparity in the export market. The ICE cotton March 2025 contract was traded at 66.04 cents per pound, which makes Indian cotton approximately 16-17 per cent costlier. Traders have said that Indian cotton is very expensive, which reduces the prospects of exporting cotton fibre, yarn, and fabric to other countries.
Source: https://www.fibre2fashion.com/