Cotton prices continue to be volatile as 2022 draws to a close. Cottonseed oil cake prices on Thursday rose by Rs 12 to Rs 2,881 per quintal in futures trade as speculators created fresh positions amid higher demand.
Prices were hit in India after textile companies had slashed their capacity by 50 to 70 percent. Cotton prices are closing the year at 25 percent on the weaker side. From its highs, it has declined nearly 45 percent because of the weak demand coming in from India, China and Pakistan as well.
India and Pakistan export a lot of cotton and textile goods and that too has seen a marginal decline. A USDA report suggests that global cotton consumption is the second lowest in a decade now and the overall global trade also is down by nearly a million bales.
Indian markets saw an all-time high of Rs 1.10 lakh per candy. But from those kinds of levels, it is now down to Rs 60,000.
Even at these cuts, the Indian cotton prices are trading at a premium to the international prices by nearly 10 to 15 percent.
A couple of pain points that India really seems to be feeling currently are productivity and supply. India's productivity is over 468 kgs per hectare versus the average world productivity of 744 kgs per hectare. Also, India does not produce a lot of long-staple cotton. It produces five lakh bales and consumes 20 lakh bales a year.