BackIndia starts selling cotton to pare stocks
Cotton Corp. of India is being forced to sell cotton into a weak market as it struggles to store purchases of around 5 mn bales made in current crop season
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Mumbai: India on Tuesday kicked off a sale of government cotton stockpiles, putting a first tranche of 5,100 bales up for auction.
The state-run Cotton Corp. of India is being forced to sell cotton into a weak market as it struggles to store purchases of around 5 million bales made in the current crop season. It typically sells stocks in phases through electronic auctions.
The decision by India, the world’s second-biggest producer of cotton, to sell the fibre in the domestic market when neighbouring China is going slow on imports could put further downward pressure on global prices, which hit a five-and-a-half year low last week.
To begin with, Cotton Corp. of India would auction 5,100 bales of cotton from India’s southern states, said an official order on a government website. It did not say whether there was a target for total sales. On 23 January, a government official said Cotton Corp. of India could start selling cotton from the first week of February as they were waiting for prices to recover.
A rise in local prices gave the government agency an opportunity to cut its losses, said Pallavi Munankar, research analyst with Geofin Comtrade, a Mumbai-based brokerage.
Spot cotton prices in India have fallen more than 9% to about ₹ 30,400-30,500 per candy of 356kg since the beginning of the crop season in October. However, prices recovered ₹ 200-300 on Tuesday, traders said. Reuters
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