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CCI’s Global E-Tender For Cotton Export, Bigger Crop Ahead In Country

19 Sep 2020 4:53 pm
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NEW DELHI (Commoditiescontrol) Cotton Corporation of India (CCI) has issued global tender to export cotton through E-auction. Cotton will be exported to Bangladesh, Vietnam, Thailand and China. The public sector cotton trading company’s move is seen in the market as desperate effort to clear the stock and get ready for bigger buying in new marketing season. CCI is still lying on huge stock of around 55 lakh bales (170 kg in each bale). It has offered to export cotton from stock lying in Gujarat, Maharashtra, Andhra Pradesh and Karnataka.

CCI has issued tender to export cotton procured during this year and last year. CCI has huge stock in his warehouses of Gujarat, Maharashtra, Andhra Pradesh. Interested importers have to bid on floor price fixed at depot level. For current season’s cotton, CCI has fixed floor price (FOB) between US Cent 66.75-70.20 per pound. It has fixed CFR basis floor price US Cent 67-71.9 per pound for current season’s cotton. Floor price for last season’s cotton was fixed between US Cent 67.50-69.15 per pound. It will export cotton from Mumbai ports on FOB basis. If importers prefer to purchase cotton on CFR basis, CCI will supply to importer’s destination.

CCI has large stock of cotton because of lower demand and consumption of the natural yarn which was dipped due to Covid-19 and various restrictions under lockdowns. As per estimate of Cotton Association of India (CAI), domestic consumption will be around 250 lakh bales which will be 30 lakh bales lower than previous consumption due to Covid-19. As domestic prices were at lower level, CCI could not sell cotton in domestic market as per it’s plan. It had procured around 120 lakh bales. According to sources, CCI has around 55 lakh bales in various godowns in the country. It has managed to clear around 65 lakh bales in domestic sale.

CCI Chief General Manager (Marketing) Dr. S. K. Panigrahi told that CCI was trying to export cotton from it’s warehouses. Empanelled traders can participate in global E-auction for cotton export. He said that it’s company’s regular trading activity. However, It could export very negligible amount of cotton till now. Dr. Panigrahi informed that current tender will have good response from foreign buyer because of favourable prices. CCI is also trying to export cotton to Bangladesh though government to Government channel. Dr. Panigrahi expected to have big deal for export to Bangladesh. Negotiation was still on at government level. However, CCI has issued global E-tender to export cotton not only to Bangladesh but also to other eastern and south-eastern countries like Vietnam, Thailand and China.

CCI has fixed floor price for e-auction after taking current scenario into account. Floor prices between US Cent 66.75-71.2 per pound are attractive offer for Indian cotton. Floor prices are equivalent to Rs. 37000-39000 per Candy (356 kg) which is average prices prevailing in Indian markets. Gujarat based exporter Mr. Chetan Bhojani said that Indian cotton was traded with premium of around US Cent 7 per pound over ICE cotton futures price due to better quality and longer stable. ICE December cotton was closed yesterday at US Cent 65.66 per pound. Therefore, Indian cotton can be exported over US Cent 70 per pound if market conditions are favourable. He says that export is good option for CCI to clear the stock before new season because domestic demand remained weak.

Present global market conditions also allow India to export cotton. Presently, domestic cotton prices were hovering at lower level therefore export is viable. This is the main reason, CCI is trying to export. As per CAI, India’s cotton export increased to 50 lakh bales till September this year. Export estimate was increased by 3 lakh bales due to favourable price dynamics. India had exported 43 lakh bales cotton last year.

CCI has biggest challenge to keep itself ready for bigger procurement. The government had increased MSP by Rs. 260 to Rs. 5515 per quintal for medium stable cotton. Therefore, CCI has to gear up to buy cotton which farmers will bring to their centre. Higher MSP will attract more farmers to CCI’s centres because open marketing prices were ruling at lower level than MSP. As per government’s purchase price, ginned cotton should be above to Rs. 46000 per candy but it’s traded around Rs. 36000 per candy. India’s cotton acreage increased 2.38 lakh ha to 129.47 lakh ha. Therefore larger crop will push higher procurement.

(By Commoditiescontrol Bureau: +91-22-40015505)

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