The Mumbai-based Cotton Association of India (CAI) is against Cotton Corporation of India stockpiling 7 to 8 million bales (170 kg each) by procuring during peak arrival season to sell to user mills during May to September time-frame.
According to CAI, this scenario will need huge investment by the public sector Cotton Corporation of India and also it will incur losses due to price fluctuations. CAI in citing the China reserve policy, India should learn from China and should not venture into the reserve situation for cotton surplus country like India.
A source, active in cotton trade stated that with the new season showing good promise in terms of arrival now and production estimate, stockpiling is not necessary. Rather, textile mills should take advantage of the prevailing low prices and procure cotton and stockpile themselves. Textile mills should approach banking sectors for financial options.
The cotton market source stated that the recent positive estimate by India’s Cotton Advisory Board for the new season should be taken into account. In this situation, creating buffer stock is unnecessary. However, when the prices decline further, to support farmers, Minimum Support Price scheme should be used, as India is currently doing for pulses.