As per the trade and industry reports, the cost of Indian cotton has become a major problem in the export market, with importing nations being hesitant to buy the natural fibre from India.
“Importing nations are afraid to purchase from us because of the low quality of Indian cotton,” said an upcountry trading source who did not want to be named. As a result, exports, which are expected to reach 75 lakh bales (each weighing 170 kg) by the Committee on Cotton Production and Consumption, a body comprised of all cotton industry stakeholders, may be slowed.
Cotton Corporation of India (CCI) has been left keeping 51 lakh bales of cotton procured this season, according to a trader from the western part of the region, owing to the fiber being marginally yellow in color. Due to the same concern, the Maharashtra State Cooperative Cotton Farmers Marketing Federation (MSCCGMF) has been unable to sell at least six lakh bales procured from growers.
CCI disputes the allegations
Cotton was procured from farmers under the minimum support price (MSP) scheme by CCI and MSCCGMF, predominantly during the early part of the current season (October 2020-September 2021). Cotton's MSP for this season has been set at rupees 5,515 per quintal by the Centre. These organisations have procured at least 100 lakh bales.
PK Agarwal, Chairman-cum-Managing Director of the Cotton Council of India, denied that there were any consistency issues with cotton exports. “We have the finest cotton on hand. We purchased good average quality cotton from the farmers, and whatever we didn't get, other traders bought,” he said. Following unseasonal rains in October and November last year, Southern India Mills Association (SIMA) Secretary-General K Selvaraju stated that cotton has quality issues this season, especially with its color.
“The CCI was persistent in ensuring that the cotton it purchased this year matched the FAQ requirements. Cotton was purchased below these norms by some private traders at a price of $500-700 per quintal less than MSP. The cotton last year was of higher quality than this year, according to the SIMA official.
CCI had no trouble selling 45 lakh bales of fiber with it from the previous season, according to a trader from the western part. “This year, due to rainfall, the unit of color reflectance (Rd) is lower in the current season's stocks,” he said. The Rd amount is a measure of cotton's witness, and a lower value indicates that the fiber is yellowish in color, most likely due to rainwater seeping in.
“Neither the micronaire nor the staple length seem to be causing any issues. The problem stems from the grading of cotton, which is mostly due to its color, according to the trader.
Prices are decreasing:
According to trading reports, the CCI lowered its export bid rates last week due to quality concerns, though one source attributed the reduction to a decline in the New York price, which serves as the benchmark.
Shankar-6 cotton, the standard for exports, was quoted at 45,100-45,500 a candy (of 356 kg) on Tuesday, up from 45,900-46,200 a week earlier, as per the Gujarat Cotton Trading Association.
Cotton rates in New York are currently priced at 84.32 cents per pound (48,350 per candy), down from 86.13 cents (49,400) last week. Raw cotton or kapas prices in Rajkot district agricultural markets have fallen by 150-200 per quintal since last week, to 6,050-6,250 per quintal. Cotton shipments this season, according to CCI's Agrawal, would be between 70 and 75 lakh bales, up from predictions of 65-70 lakh bales made last month.
Earlier this month, the Cotton Association of India forecasted exports of 60 lakh bales. Exports totaled 50 lakh bales last season. Because of the consistency concerns, exports would be about 50-55 lakh bales, according to SIMA's Selvaraju. Until last week, 46 lakh bales had been shipped during the current season, with the bulk of shipments going to Bangladesh, China, Turkey, and Vietnam.
