MUMBAI, 16 June 2025: Be it a business or a relationship, only those that have the capacity to bear losses can earn profits. But in the race to earn profits, one should not take such big risks that they will take you away from the changing market..!
Especially in the commodity business, other geographical factors also affect it. Such factors seem to be having a greater impact on the cottonseed meal trade at present. There has been a steady rise in cottonseed meal or cotton seed oil cake in the physical markets.
The prices of cottonseed oil cake increase every year from March to July in general. This time too, the prices of cottonseed oil cake have crossed the level of INR 3100 per quintal. However, some farmers still hoped for an increase in prices, so they kept the cottonseed in the warehouses. Because they still hope to get last year's price of INR 3700 per quintal. On May 10, 2025, the price of cottonseed oil cake per quintal in NCDEX futures was INR 2,900, which crossed the INR 3,100 mark on June 13, 2025, in just a period of one month.
This time, both the Cotton Corporation of India (CCI) and the Cotton Association of India (CAI) had estimated a decline in cotton production. The second estimate said that production would decline further. If we look at the production figures of cotton, bales and cottonseed oil cake of the last five years, the reason for the current bull run boom in the market will be understood. In the year 2019-20, India produced 355 lakh cotton bales and 71 lakh tonnes of cottonseed oil cake. In 2020-21, 350 lakh bales and 69 lakh tonnes of cottonseed oil cake were produced.
Similarly, in the year 2021-22, 295 lakh bales and 59 lakh tonnes of meal were produced. In 2022-23, 319 lakh bales and 64 lakh tonnes of meal were produced. In 2023-24, India produced 325 lakh bales and 73 lakh tonnes of cottonseed oil cake. This time, both the agencies have estimated the cotton bales production within the range of 291 lakh to 294 lakh bales. Based on which the production of cottonseed oil cake has been calculated to be 66 lakh tonnes. However, the demand for cottonseed oil cake in India this time is expected to be 73 lakh tonnes. Traders believe that cottonseed oil cake is currently booming due to this gap between demand and supply.
It is worth noting here that the cottonseed oil cake price in the spot market was quoted at INR 3192 last week, which means that the spot/physical market is moving up more than the futures market. Experienced traders in the market would have estimated this situation, which is why they would have taken the goods in the NCDEX futures.
Currently, 63435 tons of oil cake are deposited in the NCCL certified warehouses. Traders believe that as the prices are increasing in the spot market, this meal is being sold in the market at a premium price. Moreover, approximately 16000 tons of this deposited stock is expiring on July 10. Perhaps that is why the stock of meal is currently decreasing in the NCCL certified warehouses. The futures are liquid, open interest is currently 111800 tons, while the average daily business is INR 150 crore to 175 crores.
Experts believe that the prices will remain firm as the spot market prices are higher than the futures. Now the sowing of the new season of cotton has also started. But after the strong arrival of the monsoon, the farmers are confused due to the sudden rains taking a break. The direction of the cottonseed and cake price will be decided after the crop picture becomes clear in the coming days.
By Kalpesh Sheth is an commodities expert with years of experience.
