India: Cotton body rules out market intervention for now

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COIMBATORE, MARCH 2:

The Cotton Corporation of India (CCI) does not foresee any change in its role for now in view of the high volatility in the price of the natural fibre.

The Corporation’s Chairman and Managing Director, Mr B K Mishra, told reporters that the CCI had not gone for large volume purchase this season.

He was here as Guest of Honour at the seventh edition of Texfair 2012, a four-day expo, which began at the Codissia Trade Fair grounds this morning.

Substantiating the CCI’s stand, he said when the market price touches the minimum support price (MSP) or is greater than MSP, CCI would purchase at its own risk.

But prices have not been ruling above the MSP at present for the Corporation to consider commercial operation.

Recapitulating the cotton scenario, he said: “Cotton is available, but the pace of arrival has been less compared with last year. The last fortnight has seen a further drop in cotton arrival from 2 lakh bales a day to around 1.5 lakh bales. It is the right time for the industry to cover sizeable quantity as the prevailing rates are quite reasonable. But purchase by mills has not been substantial because of tight liquidity. Mills don’t have funds to buy,” he said.

The Southern India Mills Association (SIMA) Secretary-General, Dr Selvaraju, said that mills used to maintain four to six months’ inventory earlier, which has now dwindled to two months stock due to erosion in working capital.

Mr Mishra said that the corporation would consider strengthening its activities on cotton trade not merely from the view of supporting cotton farmers but the industry as well.

“We will make efforts to streamline our policies and consider involving ourselves in cotton export; also maintain sizeable quantity to maintain price stability and have a competitive edge in the open market.”

Source: http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article2954585.ece

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