With growing animal feed prices in the country, animal feed manufacturers have called on the state-run Cotton Corporation of India (CCI) to release cotton seed stock in the market.
The releasing of cotton seed stock can ease the cotton oil prices as well as animal feed prices in the country, as animal feed manufacturers will get additional raw material for producing animal feed. During 2019-20 cotton season starting from October 2019, CCI procured 3.1 million tons of cotton bales of 170 kilograms each (to date) and procurement is expected to surpass 10 million tons by the end of the season. From these cotton bales, CCI has so far extracted over 200,000 tons of cottonseed, which has not been released on the market. Because the price of cotton seed has touched USD$40 per quintal, compared to USD$ 34 per quintal recorded in December 2019.
Spot market of cottonseed oil cake has recorded an increase of 7% as compared to the same period last season. Photo: Wikimedia
Distorted cotton market
Edelweiss Agri Services & Credit head of research Prerana Desai said that cottonseed prices have rallied since December 2019 as there was less availability on the market. During the same period, major buying has been done by the CCI. Due to this aggressive behaviour of CCI, the market has been distorted. With a lower production, firm oil prices and high demand, we expect prices to remain high in the short term till the new mustard crop arrives in the market, Desai added. Desai also added that due to weak demand and profit booking across the counter, cottonseed oil and cake prices are going to be back to the minimum level of USD $34 a quintal.
An CCI official, under the condition of anonymity, said that since November 2019, the corporation is buying over 12% of cotton entering the market with a minimum support price (MSP) of USD$79 a quintal from all states, except Tamil Nadu and Odisha. The official further added that ensuring farmers get remunerative rates, CCI is selling cottonseed by auction. As the prices have come down to the earlier levels, CCI is going to hold auctions to sell cottonseed, All India Cottonseed Crushers Association (AICOSCA) chairman Sandeep Bajoria said.
Small and medium mills are continuously buying due to low supplies. Also, high prices of imported oil are helping local mills crush more this season. Prices have rallied and now we expect the rise and fall to be limited to 1%-2%, Bajoria added. Spot market of cottonseed oil cake has recorded an increase of 7% as compared to the same period last season.