The 2019-2020 cotton season is expected to end in September with huge stocks, both with traders and the industry.
Ashwin Chandran, chairman of Southern India Mills’ Association, said the country has never had such a high inventory at the end of the season in the recent past. Consumption by textile mills should 80 lakh bales to 100 lakh bales less than the estimate because of the lockdown and fall in demand after that.
The association estimates the closing stock to be 125 lakh-150 lakh bales. The government should come out with special package to incentivise yarn and fabric exports. Only then will demand pick up and cotton consumption increase, he said.
J. Thulasidharan, chairman of Indian Cotton Federation, added that though cotton was a high-risk crop, farmers had increasingly gone in for it in the recent years because of its profitability. With good monsoon this year, cotton production in the next season (October 2020 to September 2021) will also be higher. The current price of cotton is lower than the MSP for several varieties and the Cotton Corporation of India had purchased substantial quantities. The global prices would be subdued next season as availability globally would also be high. In such a situation, the coming cotton year would be challenging to stakeholders in the sector. The government should come out with a different system to support farmers and the prices should move according to market demand, he said.
He expects the closing stock to be close to 200 lakh bales.
The Cotton Association of India said in a press release that the carry-over stock at the end of the season would be 55.5 lakh bales. The arrivals from last October to June this year is 327 lakh bales. The association expects that production this season would be nearly 335 lakh bales.