Cotton prices drop as farmers release reservists

Due to growers starting to deliver the goods they had been holding back for a few months to the agricultural produce marketing committee (APMC) yards, cotton prices have dropped by over 9% in the last two weeks. “Farmers in a number of States have altered their minds and are eager to sell their stockpiled kapas (seed cotton). Kapasin May arrivals are at a record high and are anticipated to stay high through the end of June, according to Rajkot-based trader of cotton, yarn, and cotton waste, Anand Popat.

“Over the previous few days, cotton arrivals on a daily basis have reached 1 lakh bales (170 kg each). Yarn is not in great demand, and the recessionary trend has hurt its exports. The demand for clothing is weak, according to Ramanuj Das Boob, who sources cotton from Raichur, Karnataka, for spinning mills, international businesses, and exporters. The Agriculture Ministry’s Agmarknet division reports that cotton arrivals this month have reached a nine-year high of 1,82,572.67 tonnes (10.73 lakh bales). According to Popat, kapas arrived on average in bales between 90,000 and 110,000 every day last week, for a total of 7 lakh bales.

The market is experiencing panic. Fabric and yarn are not in demand. Also, nobody is purchasing cotton. According to yarn processor Sachin Jhanwar, production appears to be in excess. According to Prabhu Dhamodharan, Convenor of the Indian Texpreneurs Federation (ITF), “Due to sluggish demand continuing across the value chain, cotton prices are moderating in line with the same trend.” In comparison to two weeks ago, the price of processed cotton (lint) is now 56,900 per candy (356 kg).

The current quote for June cotton futures on the Multi Commodity Exchange is 58,120 per candy. At Ralkot APMC, kapas prices are currently ruling at 7175 a quintal, down from 7,950 two weeks ago.
In anticipation of higher prices, cotton farmers held back their crop this year and kept it on terraces and in backyards. They refused to sell even when quintal prices were ruling at 8000 against the minimum support price of 6,080 since they learned that while prices were ruling at 57,000 in India, they were ruling at 67,000 in China, said Jhanwar.

“Export price parity exists to some extent. Popat predicted that things will pick up soon. Cotton exports have reached 11.50 lakh bales thus far, and September shipments are predicted to reach a 19-year low of 23 lakh bales. “Textile companies are operating at lower capacity utilization levels across the value chain. Going forward, cotton prices will once more be influenced by real demand factors, such as apparel exports,” Dhamodharan added.

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