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The Cotton Corporation of India (CCI) has begun buying cotton at the minimum support price (MSP) in Telangana, with plans to extend procurement across all major cotton-producing states post-Diwali. Current cotton prices are slightly above MSP due to firm cottonseed prices influenced by import duties on edible oils. The government set an MSP of ?7,121 per quintal for medium staple cotton and ?7,521 for long staple, a 7% increase from last year. CCI expects to procure 50-70 lakh bales this season, compared to 33 lakh last year. Reduced acreage and adverse weather conditions have affected crop output, estimated to drop by 7% this year.

Key Highlights

# CCI starts cotton procurement at MSP in Telangana.

# Post-Diwali, procurement to extend to other cotton-growing states.

# MSP for 2024-25 set at ?7,121 and ?7,521 per quintal.

# CCI may procure up to 70 lakh bales this season.

# Cotton output expected to decline by 7% due to adverse weather.

The Cotton Corporation of India (CCI) initiated cotton procurement at minimum support price (MSP) levels in Telangana last week, with intentions to expand across all major cotton-producing regions after Diwali. CCI Chairman Lalit Kumar Gupta reported that approximately 600 bales of cotton have already been procured at MSP in Telangana, adding that the organization anticipates increased arrivals post-Diwali, necessitating extended operations. With cotton prices currently hovering just above MSP due to rising cottonseed costs, this firm trend is supported by increased import duties on edible oils, which indirectly affect cottonseed prices.

The Centre has set an MSP of ?7,121 per quintal for medium staple cotton and ?7,521 per quintal for long staple, marking a 7% increase over last year’s rates. In light of the expected surge in arrivals, CCI is prepared to procure between 50 to 70 lakh bales, a substantial rise compared to the 33 lakh bales purchased last season. Currently, CCI holds a stock of 15 lakh bales from the previous year, ensuring market support in the coming months.

The cotton crop this season has been impacted by recent rains and adverse weather conditions, with estimates from the Cotton Association of India (CAI) projecting a 7% reduction in total output at 302.25 lakh bales, down from 325.29 lakh bales in the prior season. This decline is largely attributed to a 14-lakh hectare reduction in planted area, as farmers in key states have diversified into crops like groundnut and pulses. Output reductions are expected mainly in the North and Central zones. With the country’s daily cotton arrivals surpassing 1 lakh bales, trade and millers are focusing on quality as new stocks enter the market.

Finally

CCI’s active procurement aims to stabilize cotton prices at MSP, countering seasonal pressures, with a likely significant impact on market stability as arrivals peak.

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