Cotton has soared more than 10 per cent so far this year in 2021 due to low global production and increasing demand. Even after this, there is a fast trend in cotton. Cotton prices are running close to 22210 per bale (one bale = 170 kg) on the commodity exchange MCX. According to market experts, the kind of global demand for cotton has increased after the opening of the economy closed due to Corona epidemic, it could show a level of 24500-25000 in the next two to three months. In such a situation, it is becoming profitable for the commodity investors.
Apart from this, cotton is becoming the best crop for the farmers and at this time its prices have reached 15 percent more than the MSP. According to the Cotton Association of India (CAI) estimates, 54 lakh bales of cotton is expected to be exported from India in the current cotton season. However, if we talk about common people, then it can be seen as inflation of clothes on them. Apart from this, there is a demand for cotton in the medical industry as well.
Due to this, cotton price is getting stronger
- The Cotton Corporation of India (CCI) has purchased 25 per cent of the cotton current crop under the Minimum Support Price (MSP) program and is still buying it, which has led to a strong cotton price.
- Export demand remains strong, so that Indian fiber and yarn prices will remain above the MSP level.
- Economic activity was affected due to the worldwide lockdown due to Corona epidemic, but now the situation is slowly coming back on track. The demand from the textile industry has increased.
- CCI has purchased 6.9 million bales from the 2021-21 crop, which accounts for 40 per cent of the cotton sold by farmers and 25 per cent of USDA (United States Department of Agriculture) estimates. Cotton prices are not coming down due to increase in purchases on MSP. The MSP of medium staple cotton is Rs 5515 per quintal for 2020-21 and Rs 5825 per quintal for long staples.
- In the budget of 2021-22 for the next financial year, Union Finance Minister Nirmala Sitharaman has announced a custom duty of 5% on cotton and 10% on cotton waste. Apart from this, the Finance Minister has announced imposition of 5% agriculture infrastructure and development cess on cotton, which led to a custom duty of 10% on cotton. Custom duty on raw silk and silk yarn or yarn spun from silk waste has been increased from 10 percent to 15 percent. The increase in custom duty has strengthened its price.
- China is aggressively buying cotton, due to which its global demand has remained strong. Both China and Pakistan are shopping for cotton. Cotton production in Pakistan has decreased.
Estimates of slight increase in production
Cotton production will not increase this time as compared to the previous year of Cotton Association of India (CAI). This time CAI has estimated production of 360 lakh bales for 2021-21. On the other hand, according to the information given on the website of the Mini Ratna Company Cotton Corporation of India (CCI) Limited.
According to a Committee on Cotton Production and Consumption of the Central Textile Ministry, it is estimated to produce 371 lakh bales (170 kg in one bale) in 2020-21.
Last year, in 2019-20, production of 365 lakh bales was done. According to the latest estimates, in Gujarat, the highest cotton project in 2020-21 is 90.5 lakh bales. Production per hectare is also high in Gujarat. According to the projection, Gujarat will produce 676.86 kg of cotton per hectare, while India’s average cotton yield is estimated at 486.76 kg per hectare. Cotton per hectare in the country is estimated to be 683.04 kg in Rajasthan. Last year, 486.76 kg cotton was harvested per hectare.