MUMBAI (Commoditiescontrol) - Cotton Oil Cake prices in the spot market declined to 3-month low during the week ended 22nd July with a drop of 18.33 % amid poor demand from cattle feed manufactures. Cotton oil cake price declined by Rs 85 to trade at Rs 1,715/100kg at benchmark Kadi market over past week in line with our expectation.
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Confusion among traders, on GST application on cotton oil cake of 5% or not has entered for third week since commencement from 1st July 2017 resulting in very dull trading activity and has weighed on cotton oil cake prices.
According to traders, for 1-20 July period trade volume was down by around 50-55 percent as compared to the same time of the last year. Stockiest are still holding the huge quantity of stock and they are waiting for the demand to pick up so that they can quote higher prices.
In coming week, there is a possibility that Indian government may give clarification on cotton oil cake regarding GST which will decide the further trend of the cotton oil cake.
According to our analysis there is room for the prices to decline by around Rs 100-150/100kg in coming one and half month as up coming new cotton crop of 2017-18 is prospering well with time and the production may turn out to be 390-400 lakh bales.
Following data is the state wise cotton acreage report as on July 20. The weekly report is compiled by Directorate of Cotton Development, Nagpur and released by Ministry of Agriculture, India.
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Cotton planting reached 104.29 lakh ha as of July 20 compared to same period last year at 86.86 lakh ha according to Ministry of Agriculture.
Cotton planting has progressed 85 percent of the total normal area at 122.46 lakh ha and remained significantly ahead of 13 percent from the normal area as on date at 92.06 lakh ha showing signs of positivity in planting.
Reports from the field suggest that crop conditions were rated superior in North India with prospects of better yield while Central and South India received a good spell of above normal levels of rainfall which nullified all fear in relation to crop growth and possibilities of re-sowing.
However, rainfall recorded was excess in Gujarat causing waterlogging in some cotton fields. No major damage was officially reported but if rainfall persisted over the weekend then there could be some impact to the late sown crop’s yield which is an early assumption and should not be ignored.
Further, demand of cotton oil cake is likely to decline by around ten precent due to higher availability of green grass.
Most of the farmers reduce the percentage of cotton oil cake in feed mix and replaces it with green grass.
Also the other feed substitutes such as bajra churi, tur churi, chana churi and guar churi are still available in the range of Rs1,200-1,500/100kg .
Cotton oil cake futures followed the trend of physical market. Cottonseed oil cake August futures prices during the week on NCDEX ends down by 2.09 percent at Rs 1,591/100kg.
Next Week: Cotton oil cake prices are likely to trade bearish due to higher stock and good prospects of the cotton crop in 2017-18.
(By Commoditiescontrol Bureau; +91-22-40015516)
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