Cotton Prices Witness Decline as Farmers Begin Selling Produce, Arrivals Soar

Cotton prices in the futures trade and at the farm gate have experienced a notable decline of 8% and 12% respectively in the past fortnight. The surge in cotton arrivals and subsequent decline in prices can be attributed to farmers' decisions to sell their cotton holdings. Many farmers, hoping for a resurgence in prices, held onto their crops for an extended period.

However, with prices not meeting their expectations, they have begun selling their produce, resulting in a significant increase in arrivals.

The daily arrival of cotton in the markets has surged fivefold to 100,000 bales, with each bale weighing 170 kg. This substantial increase marks a significant departure from the historical average of 20,000 bales a day in May. Ravi Sam, Chairman of the Southern India Mills Association (SIMA), remarked on the unusually high arrivals, stating, "I have not seen such high arrivals in May. A volume of 100,000 bales per day is something that would typically be observed by January or February."

The decline in cotton prices presents an opportunity for buyers, including textile mills and traders, who can take advantage of the increased availability of cotton at comparatively lower prices. This development may lead to a stabilization of cotton prices in the market, offering some relief to industry participants.

The decline in cotton prices is reflected in the June cotton contract on the Multi Commodity Exchange (MCX), which registered a 3.05% decrease on Monday. In the spot trade, cotton prices dipped from ₹62,000 per candy (each candy weighing 356 kg) to ₹57,000 in Maharashtra. Additionally, the price of raw cotton with seeds, sold by farmers to ginners, has fallen from ₹8,000 per quintal two weeks ago to ₹7,000-7,200 per quintal as of Monday.

While the decline in cotton prices may concern farmers who had anticipated higher returns, it also indicates increased market activity and trade volume. The higher arrivals signify a robust cotton market, which can contribute to the overall growth and development of the cotton sector.

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As the cotton season progresses, industry experts will closely monitor market dynamics and farmers' decisions regarding the sale of their cotton produce. The fluctuation in prices serves as a reminder of the volatility inherent in agricultural commodities and highlights the importance of informed decision-making for farmers and market participants.

It remains to be seen how the cotton market will evolve in the coming weeks, as factors such as demand, supply, and global market conditions continue to shape the trajectory of cotton prices.

source-The Economic Times

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