The outbreak of Coronavirus in China is impacting cotton growers in Vidarbha as farmers in the city largely depend on government purchase at minimum support price (MSP) of Rs 5,550 a quintal. As private traders in the city continue to buy at lower rates, chances of open market rates crossing MSP are slim due to absence of Chinese buying, which has been hit by the coronavirus outbreak.
China is one of the major buyers in international market. The virus outbreak has hit logistics in China, even blocking exports of cotton consignments from India. This has in turn further dampened the rates in India. Traders said Chinese demand could have taken the rates up, at least crossing the MSP in the private market.
A major chunk of cotton supply has been taken away by the government procurement mechanism, which is still not being offloaded in the open market. Though sizeable supplies have been sucked out of the market, rates of raw cotton have not inched up, leaving the farmers to settle at MSP. The price is even less if a farmer goes to private traders who are not offering more than Rs 5,200-5,300 a quintal.