India's cotton stocks from the 2008-09 season ending this month may shoot up by 62 per cent despite a poor crop, but prices are unlikely to come down significantly as demand shows signs of a revival.
"The carry-over stocks of cotton in the country from this season are estimated to touch 71.50 lakh bales (One bale is equal to 170 kg), up from 43.50 lakh bales a year before," Cotton Corporation of India (CCI) Chairman and Managing Director Subhash Grover said.
Though cotton output this season fell by 25 lakh bales to 290 lakh bales, the rise in reserves could be attributed to the dip in export as well as domestic demand, he explained.
The country exported just 35 lakh bales of cotton this season, compared with 85 lakh bales in 2007-08, as poor demand overseas because of global economic crisis and higher domestic rates following a sharp increase in the benchmark price of the fibre crop made overseas shipment a less profitable option.
Nevertheless, an industry official said rise in stocks may not guarantee low prices of cotton in the coming months as demand, both internal and export, is expected to rise in view of the recovery in economic slowdown.
Cotton prices are currently ruling higher than the MSP in Punjab, Haryana and Rajasthan, Grover said.
The centre has raised the MSP of standard cotton (long staple) to Rs 3,000 per quintal for 2008-09 from Rs 2,030 in the previous year. The MSP of medium staple cotton has been raised to Rs 2,500 from Rs 1,800 per quintal. The MSP is kept at the same level for the 2009-10 season too.