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Cotton prices remain above MSP

Even though India is looking at a bumper cotton crop, prices are expected to remain above minimum support levels till December, except in Telangana. India’s cotton production in 2017-18 is expected to be 375 lakh bales. Presently, cotton price of the fair and average quality is above minimum support price. But private procurement currently on in Telangana is below minimum support price. Prices are low because the crop has more moisture due to the recent rainfall and traders expect better quality and increased arrivals post Diwali.

Even if the Cotton Corporation of India does minimum support price procurement operations, they may not be significant. If production has increased, consumption is also likely to increase. The number of spindles is increasing in Gujarat due to the incentives extended by the state government. Cotton arrivals started in Gujarat and Maharashtra 20 days ago. Cotton prices in Maharashtra are expected to remain higher than minimum support price at least till December.

Irrespective of market prices, though, yarn manufacturers have requested CCI to procure 30 to 40 lakh bales of cotton to help the industry during the lean period. However, CCI is clear on commercial procurement of cotton only if it does not get enough cotton through its minimum support price operations.