The Cotton Association of India (CAI) has further trimmed the crop estimate for the fibre crop to 321 lakh bales (170 kg each), about 7 lakh bales lower than its previous month’s estimate. The crop is seen likely to be the lowest since the 305 lakh bales recorded in 2009-10 (as per Cotton Advisory Board estimates).
The crop estimate shows an about 12 per cent dip from the previous year, attributed to a sharp decline in crop size in the key growing States of Telangana and Karnataka (-24 per cent each), Gujarat (-21 per cent) and Maharashtra (-8 per cent).
“The main reason for the reduction is the water scarcity in some States, and the fact that farmers uprooted their cotton plants in 70-80 per cent of the area without waiting for third and fourth pickings,” said CAI President Atul Ganatra after the association’s Crop Committee Meeting.
Decline in exports
The CAI has estimated cotton exports for the season (October 2018-September 2019) at 47 lakh bales, against last year’s estimated 69 lakh bales. This dip is attributed to the higher prices and smaller crop size of Indian cotton.
The imports this year are likely to be higher at 27 lakh bales, against last year’s estimated 15 lakh bales. “Indian mills have to compulsorily resort to imports to continue running their day-to-day operations,” Ganatra observed following the reduced crop estimate.
Domestic consumption of the fibre is estimated at 316 lakh bales for the season, of which CAI has estimated supply till March 2019 at 290 lakh bales. Of this, about 158 lakh bales are pegged for domestic consumption, 39 lakh for exports and about 93 lakh bales for overall stock with textile mills, Cotton Corporation of India (CCI) and multinational companies.
The CAI has estimated a closing stock of 13 lakh bales at the end of the season in September 2019, following a tight cotton balance sheet.
Prices on the rise
Prices are already headed north, with spot prices quoting at ₹6,500 in north Gujarat’s Kadi market on Tuesday, near a record high. Ginned cotton prices have crossed ₹45,500 a candy (356 kg each), which is an increase of about ₹4,000 a candy within just a month.
However, there were contrasting views from ginners in Saurashtra. Arvind Patel, a leading ginner from Shapar near Rajkot, said the crop will hover around 340 lakh bales for the year with farmers holding about 15 per cent of the crop. “There will be better crop than what is being projected. But even if the crop hovers around 340 lakh bales, we still believe cotton prices will remain firm beyond ₹47,000. The rally in prices can be attributed to higher futures prices in the New York markets,” he remarked.
In the international markets, cotton quoted at 79 cents per pound for May ICE futures, which represents a rise of about 3 cents over a fortnight. In the cash segment, ICE cotton quoted at 74.4 cents a pound, against 72.08 cents a fortnight back.