Cotton prices up after farmers exhaust stocks


Nagpur: A majority of farmers may have only fetched slightly more than the minimum support price of Rs4,000 for the cotton they grew. Months after the harvest, the traders are now reaping gold. Within a month, price of lint (processed cotton) has touched Rs42,000 per khandi (350 kgs) as against Rs33,000. Raw cotton is Rs6,500 a quintal, a rate which was seen 6-7 years ago and after that there was only a slump.

A section of traders had anticipated trends in cotton prices. Since beginning of the year there was a steady increase in price of cattle fodder made of cotton seeds. Fodder demand slowly increased the rates of raw cotton. Low output as compared to the previous year further pushed this trend, said sources. Based on these factors those who had the funds cornered raw cotton from the markets and sat on the processed lint waiting for price to rise.

Finally, as a shortage was created, the rates began increasing to Rs41,000 to Rs 42,000 a khandi of lint. This made raw cotton dearer too but it won’t benefit the farmers as most of them have sold their stocks long ago. It also left the spinning mills crying foul as the rates of yarn have not gone up proportionately.

Many traders purchased cotton at slightly higher rates even if it was not viable given the price of lint at that time. However, it was a strategy as they were anticipating that the lint rates will increase in coming days. It was a gamble that paid off, added a trader in Amravati.

N P Hirani, chairman of Maharashtra Cooperative Cotton Growers Federation, said it is time the state government intervened. “If the state can check the rates of other commodities like tur dal, there should be action against hoarding in cotton also. Spinning industry is a major employer. At the current rates of lint, a spinning unit has to take a hit of Rs15-30 a kg,” said Hirani. The cotton production was down by 78 lakh quintals in 2015 compared to the year before that led to a major shortage of commodity.

A source in Wani, a cotton trading centre, said rates of raw cotton had recently touched Rs6,500 a quintal. By this time there is negligible stock left with the farmers. Even traders may be having only around 15% to 20% of the total produce with them, However, this is enough to capitalize on the situation. In last June, lint was selling at Rs34,000 a khandi and raw cotton rates were around Rs5,000 a quintal. It was marginally higher than the market rates during peak harvest season. This year even as farmers sold at close to the support price, the rates jumped 44% later, said a trader on condition of anonymity.

The rates have gone up within a month. Apart from the traders, stock was now only left with big farmers who had holding capacity, said Ravi Agrawal, a cotton trader at Paratwada.