MUMBAI (Commoditiescontrol) - Cotton Association of India (CAI) has lowered it’s production estimate of cotton by around one lakh bales (170 kg each) from earlier projection (February). Recently, CAI said that cotton production will be 396 lakh bales in the current season that begins from October 1, 2014. Earlier, the association projected cotton production of 397 lakh bales.
The association has pegged North Zone, which includes Punjab, Haryana and Upper Rajasthan, cotton production at 53.20 lakh bales. Largest producing Central Zone comprising of Gujarat, Maharashtra and Madhya Pradesh is expected to produce 219.25 lakh bales. Southern Zone is estimated to produce 117.25 lakh bales while other parts would contribute 6 lakh bales.
Cotton production touched a record of 407 lakh bales last year. After the release of cotton production estimate by CAI, Commoditiescontrol carried out a survey to ascertain wide changes to trade estimation. We have interacted with the leading cotton traders and businessmen. According to industry experts and trade representatives with whom we discussed the scenario, they opined that the cotton production may be as low as 350-375 lakh bales in the country.
Mr Dilip Patel, president of All India Cotton Ginners Association (AICGA), said that cotton production was estimated at 385 lakh bales at the beginning of current season. But the production is likely to be 375 lakh bales. Domestic consumption will be 360 lakh bales. He says that New York cotton futures improved recently. Cotton may follow the same trend in Indian markets as well. If the domestic yarn industry gets better orders after improvement in global market, cotton prices will rise in the country. However, the market trends will largely depend on the policies of state run Cotton Corporation of India (CCI).
If CCI sells cotton according to market conditions, domestic mills will prefer to buy. If CCI fixes higher price for cotton sale, it will find fewer buyers and domestic mills will also face difficulties with tight availability. Mr Patel told that unginned cotton (Kapas) may touch Rs 900 per 20 kg in Gujarat markets till next sowing season. Presently, the prices are hovering between Rs 820-830 per 20 kg. The farmers did not get attractive return from oil seed crops including castor seed so they will not have any other option except cotton for sowing. Although, the farmers could not get expected return from cotton, hence sowing may fall 10-15 per cent not only in India but across the world.
Mr Sanchit Rajpal, Director of Aurangabad based Manjeet Cotton Pvt Ltd said, “Cotton production is expected at 360-370 lakh bales during current season”. Explaining the cut in production estimate by some associations, he said that these organisations did not estimate accurately at the beginning of the season. He said, his business decisions are based on his estimates. He added that presently, cotton is traded at bottom price but nobody can predict how much price will improve in the days to come because a number of factors are affecting market sentiments.
Mr. Naresh Pal Bansal, Chairman of Abohar based Bansal Industries told that cotton production will not exceed from 350-360 bales this year. Country is likely to receive 305 lakh bales of cotton till March 31, 2015. The arrival is expected 20 lakh bales in April, 15 lakh bales in May and 10 lakh bales in June. He told that CCI has purchases 50-55 lakh bales cotton in Andhra Pradesh/ Telangana out of total procurement in the country.
CCI sold cotton at the price of Rs 36,000-36,300 per candy (356 kg each) last Thursday. But there were no buyers in north India and Gujarat because their cost could inflate on high cotton price. CCI has stock in Maharashtra as well, but it sold cotton which was procured from Gujarat and north India. CCI has so far sourced around 86 lakh bales of cotton. It is holding major stock in Andhra Pradesh and Maharashtra. If CCI sells it’s stock at higher price, carry over stock will be huge for next season. Mr Bansal predicts that cotton prices may improve around Rs 1,000 per candy during next few days. But further price rise is not expected for now.
Mr Deepak Poldiya, General Secretary of Marathwada Cotton Ginners Association told that cotton production will be 340-350 lakh bales. Cotton average yield dropped drastically this year. Cotton production could not be projected accurately because of unrealistic assessment of average yield. He says that cotton production estimate revised lower because of lower production in Marathwada and Gujarat.
”Furtad” or low micron cotton output is expected to be 5-10 per cent this year as against the previous years production that overwhelmed every possible estimate convincingly. Traders expect cotton prices to strengthen by another Rs 2,000 per candy, beyond which it will be difficult call on the commodity.
Mr Kailash Garg, Chairman of Bathinda based Kailash Cotton Factory opined that cotton production will not be more than 375 lakh bales this year. “The crop was weak in Gujarat and Maharashtra so production may be fall.” Cotton demand is very weak in domestic market and China. If China’s demand increases, this will be good for the industry.
Mr Jayesh Patel from Jaiprabhu Cotton Industreis, Bijapur said that production will be 375 lakh bales and prices will increase to Rs 35,000 per candy gradually. But big price rise is not expected this year.
(By Commoditiescontrol Bureau; +91-22-61391533)
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