According to reports from some Indian cotton processing companies and CCI, CCI purchases have been carried out from the northern cotton area to the whole country since early October to ensure that the price of seed cotton sold by farmers is higher than or equal to the MSP (the MSP in 2020/21 is 5,825 rupees/quintal), CCI has made sufficient preparations in terms of acquisition funds, warehousing, transportation and other aspects to achieve the purpose of protecting farmers’ income, stabilizing the cotton planting area in 2021, and meeting the consumption needs of cotton mills.
Some institutions, international traders, and speculators judge that due to the current relatively low selling price of Indian seed cotton (mainly sold to private companies), the substantial increase in Indian cotton production in 2020/21, and the domestic COVID-19 epidemic in India, Due to the raging epidemic and other influences, CCI’s actual acquisition volume this year may be higher than the 11.5 million bales in 2019/20. If we also consider that there are about 5.5 million bales of cotton carryover inventory from the previous year, CCI’s warehousing, acquisition funds, and sales pressure Not to be underestimated.
Judging from the survey, CCI once again raised the benchmark cotton sales price on October 20. The cotton sales benchmark prices for 2018/19 and 2019/20 were both raised by 300 rupees/kandy compared with the previous period, mainly due to ICE Cotton futures and MCX futures have risen in turn, and Indian cotton has been signed for export and domestic consumer demand has been unsatisfactory. However, the increase in terminal sales prices has been difficult to pass on to seed cotton and cotton farmers. The main reasons are as follows:
First, the monsoon rains in India come early and leave late. The rainfall exceeds normal levels, causing floods and crop disasters. The moisture content of seed cotton is far greater than the CCI purchase standard, and farmers can only hope The high price of MSP makes me sigh. According to feedback from some Indian ginners, the moisture content of seed cotton harvested and marketed in Punjab, Haryana, Rajasthan, Gujarat and other states generally reaches 15%-25%, which is much higher than the CCI purchase standard of 8%-12%. CCI The only option is to refuse (due to frequent rainfall and limited space, it is more difficult for cotton farmers to dry);
Secondly, the COVID-19 epidemic has had a relatively large impact on farmers’ production, life, income, work, etc., and there is an urgent need to sell cotton, Agricultural products such as peanuts recycle funds. Therefore, when CCI purchases are late and the quality requirements of seed cotton are high, farmers can only reluctantly sell low- and medium-quality seed cotton to private companies (including ginners) at prices significantly lower than MSP. After all, “you can keep green hills without fear of running out of firewood”; CCI’s rejection of low-quality or high-moisture seed cotton appears to be a “green light” for private enterprises, but it actually meets farmers’ needs for “quick sale and quick payment”;
Third, CCI may continue to raise the purchase standard for seed cotton to reduce the pressure on warehousing and capital flow, resulting in a rapid widening of the lint price difference between high-quality and low-quality Indian cotton. The early realization of “high-quality cotton and good prices” will benefit Indian cotton, Cotton textile industry upgrade. A large private cotton company in Gujarat said that in addition to setting purchase standards for seed cotton moisture and quality, the CCI is expected to also stipulate impurity content, consistency, length uniformity and other aspects. Trying to achieve the goals of stabilizing cotton prices, increasing farmers’ income, and reducing inventories with minimal investment and low prices. </p
