Release cotton seed stock in market says industry to Cotton Corporation of India

The cotton industry is concerned that the huge cotton seed stock available with the state-run Cotton Corporation of India (CCI) may result in an increase of cotton oil as well as animal feed prices.

For the 2019-20 season beginning October, the agency has procured 3.1 million tonnes of cotton bales of 170 kg each till date and aims to procure 10 million tonnes of the commodity this season. From the cotton procured by the CCI, the agency has extracted more than 200,000 tonnes of cotton seed. About 20 per cent has not been sold in the market by the agency at a time when the season is at its peak. This has led to prices touching Rs 2,750 a quintal in a few markets in December followed by slow buying by main buyers.

“Cotton seed prices have rallied since December with low supplies in the market. The major buying this cotton season has been done by the CCI, which, unlike in previous years, is not selling cotton seed but holding it,” said Prerana Desai, head of research at Edelweiss Agri Services & Credit. “This has distorted the market. With a lower production, firm edible oil prices and good demand, we expect prices to remain high in the short term till the new mustard crop arrives in the market.”

Cotton seed prices have risen to Rs 2700-2750 a quintal of 100 kg each from Rs 2400 a quintal in December in Akola market. Similarly, in the spot market, cottonseed oil cake has seen an increase of 7 per cent. Desai said that in the past two-three days, weak demand and profit booking across the counter had weighed on cotton seed oil and cake prices and were coming back to the minimum levels at Rs 2400-2500 a quintal.

Since November 2019, the CCI has been buying 10-12 per cent of cotton arriving in the market at the minimum support price of Rs 5,550 per quintal across all major cotton producing states except Tamil Nadu and Odisha, said officials. “We are ensuring that farmers get remunerative rates and we are selling cotton seed by auction,” said an official, who did not wish to be identified.

The All India Cottonseed Crushers Association (AICOSCA) said cotton seed supplies were improving. “The CCI is now holding auctions to sell cotton seed. Small and medium mills are continuously buying due to low supplies. Also, high prices of imported oil are helping local mills crush more this season. Prices have rallied and now we expect the rise and fall to be limited to 1-2 per cent,” said Sandeep Bajoria, chairman, AICOSCA.

Cotton ginners said 15 million bales of cotton had arrived in the market so far and that the CCI had procured 20 per cent of the stock. This year the industry is expecting cotton production to be 34.5 million bales.