Cotton prices decline anticipation of higher production & low demand from the textile industry

Prices of the fibre in the domestic market have dropped below Rs 90,000 per candy (356 kg per candy) from over Rs 1 lakh per candy in a week as early sown cotton sales have started in mandis in cotton-growing states like Gujarat. Due to increased crop supply and poor demand from the textile industry, market analysts predict further drops in cotton prices.

“At the moment, crop conditions in all cotton-growing states are great, and if all goes according to plan, we anticipate producing more than 350,00,000 bales (170 kg each bale) in the following 2022–23 season, up from 315,00,000 bales in the current season. Production may rise by another 25,000 bales if October does not see heavy rains, according to Atul Ganatra, president of the Cotton Association of India (CAI).

The president of All India Cotton, Cotton Seeds and Cotton Cake Brokers Association, Avdhesh Sejpal, asserted that even after the peak arrival of fresh cotton, cotton prices in the Indian market will not fall below Rs70,000 per candy. Sejpal noted that the flood-damaged cotton crop in neighbouring Pakistan and the decreased production in the U.S and China as a result of unfavourable weather conditions will result in a significant increase in cotton export demand over the following two to three months.

Due to the tremendous demand from the textile industry just a few months ago, cotton prices surged as high as Rs1.10 lakh per candy. However, prices have been steadily falling for the past month. Gujarat now has 2.55 million hectares of cotton planted, up from 2.25 million hectares last year. This is a rise of over 0.3 million hectares. Of the nation’s overall cotton production, Gujarat accounts for the lion’s share or about 30%.

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