Indian cotton prices drop by 30% in 2 months

Comprehensive Indian media reported that India’s cotton prices have dropped sharply from Rs. 63 lakh per km to 436 kg (about US$ 3,960 per ton) two months ago to 4.3 lakh per kg (about US$ 2,700 per t), a decline of more than 30%.

Affected by the drop in cotton prices, nearly half of the ginners in Gujarat, India’s main cotton producing area, suspended business and waited for price recovery.

The Solaštra Gunning Association said that the purchase price of some cotton ginners’ inventory is around Rs.60,000 per karaza and they currently have a deficit of Rs.2, 000 per karaza. They hope that the price of cotton can be returned to 6.3. Rs.1, but this requires the government to reopen the cotton exports. The Solaštra Gunning Association has joined other agricultural-related associations in suggesting to the government that the export quota for cotton be raised.

Dilip Sanghani, Agriculture Minister of Gujarat, said that a major factor in the price drop of cotton is the cotton export quota imposed by the government. To reverse the current decline in cotton prices, the central government should increase the cotton export quota to 15 million bales (1 bale to 170 kg).

The chief minister of Gujarat also sent a letter to Indian Prime Minister Manmohan Singh, demanding higher cotton export quotas.

At present, the export quota for the 2010-11 cotton season is 5.5 million bales. The National Cotton Advisory Committee of India forecasts that the 2010-11 cotton season output will reach a record high of 31.2 million bales.