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Cotton takes support at MSP as arrivals pick up

Date: 23-09-2019
Subject: Cotton takes support at MSP as arrivals pick up
Chandigarh: Cotton spot rates are hovering around the minimum support price for the commodity, down 8-10% from a year ago primarily on build-up of stock due to sluggish exports and fresh crop arrival in Punjab, Haryana and Rajasthan.

Cotton prices are not expected to spike from current levels.

According to traders, the domestic cotton market is also suppressed due to headwinds in export of cotton yarn, but demand for cotton seeds and better quality of fibre this season is managing to keep prices from slipping further.

In Punjab and Haryana, raw cotton is selling for up to Rs 600 above the MSP of Rs 5,450, but analyst said these rates are prone to a downward movement as the condition of cotton plantations across the country is good and a record harvest is on the cards.

“Indian prices have to come down to buttress sagging exports of cotton yarn,” said Rakesh Rathi, former president of Bathinda-based India Cotton Association Ltd.

"Either domestic cotton prices needs to be at par with the international price to arrest the fall in exports or the currency valuation of Rupee and US Dollar needs to be favourable for the trade.”

Experts anticipate a good crop in the current year as the condition of the standing crop is good. “If favourable weather keeps up, a record output and high quality of cotton is expected this year,” said a senior scientist at Central Institute of Cotton Research.

Cotton output of 7.5 million bales is expected in Punjab, Haryana and Rajasthan, compared with 6.5 million bales last year. “The prices will further mellow from current levels and remain around MSP as arrival picks up in the coming weeks, as slump in exports has affected buying capacity of spinning mills,” cotton trader and consultant Harish Kataria said. He added that the possibility of a thaw in US-China trade relations or crop failure in some major cotton-growing state could support prices wh ..

“Spinning mills are unlikely to indulge in bulk buying at prices much higher than the MSP, as they are affected by slump in exports,” an executive of Northern India Textile Mills (NITMA) said. Textile mills have been seeking direct benefit transfer to support farmers instead of price manipulations via MSP. “But the government is keeping away from the step due to bottlenecks in implementing it,” the executive said.

Source: economictimes.indiatimes.com

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