US-China ‘war’ hits TS cotton: Market expects turmoil, Rs 5,000/quintal in Khammam

Khammam: Cotton traders in Khammam are expecting turmoil in the market, with the price expected to settle between Rs 4,500 and Rs 5,000 per quintal. The minimum support price for cotton per quintal is `5,575, and traders had purchased cotton at Rs 6,100 per quintal at one stage in the previous season.

Mr Gudavarthi Srinivasa Rao, a cotton exporter, said, “China used to import cotton yarn at Rs 49,000 per bale (365 kg) till recently, and the price has fallen to Rs 42,000. It fall further, below Rs 40,000.”

In a situation of falling prices, the Cotton Corporation of India is the establishment that offers MSP to farmers. CCI buys the cotton from farmers and sells it to local textile companies.

Apart from cotton yarn imports by China, farmers will also be hit by a partial shutdown called by cotton spinning mills in India due to a squeeze in the demand from China.

Besides, Bangladesh has accumulated yarn stocks, a potential risk to the millers as well as farmers.

Farmers of Khammam district have raised cotton on 85,000 hectares in the Kharif season against the average of one lakh hectares. The reason was not commerce but the poor weather. Cotton sowing was delayed due to the late rain and farm officials discouraged farmers from cultivating the crop. They asked them to go for chilli and red gram instead.

Some farmers stayed with cotton, ignoring the advice of farm officials. Mr K. Sridhar, a farmer, said, “We will not leave the crop because we expect some good price every season. It motivates us.”

The farmers used to produce 20 lakh quintals of cotton every year and up to 60 per cent of this used to be exported in the form of yarn. Experts said that the state and Central agencies should be ready to face the situation, if exports to China are hit and the price begins falling.