 "Cotton arrivals fall by 19% on low demand, increased holding capacity by farmers")
Sluggish demand from domestic mills and increased holding capacity among farmers has led to a decline in total seasonal arrival of cotton by about 19% so far this year as compared to arrivals during the same period last year. The country's total seasonal cotton arrival by end of January was around 17.02 million bales (a bale of 170 kg) as against 21 million bales by the end of January 2015.
However, as compared to the total estimated cotton production of 36 million bales, the arrivals of 17.02 million bales forms around 47% of the output.
“A healthy rise in export demand during November and December 2015 pushed up farmers' expectations. As a result, in hope of better returns, farmers are holding on cotton stocks which has resulted in fall of arrivals for the season till January 2016 as compared to the same period last year," reasoned Arun Dalal, an Ahmedabad-based cotton trader.
According to traders, farmers are not willing to sell raw cotton (known as kapas) below Rs 1,000 per 20 kg. For the past two months, the prevailing price in the market is between Rs 880 per 20 kg and Rs 965 per 20 kg.
Daily arrival of cotton in major cotton producing states like Gujarat has come down from 55,000 bales to 40,000 bales a day in recent times. On the other hand, prices have also begun falling due to weak buying by domestic textile mills. Against this, daily arrival across India is being registered at 130,000 bales as against 160,000 bales two weeks ago.
The other reason that led to high expectation of returns among farmers was an estimated fall in cotton production. “Estimates of fall in production made farmers’ expectations high this year, which encouraged them to hold their produce,“ said Nayan Mirani, vice-president of Cotton Association of India (CAI).
Also Read
CAI has estimated cotton production at 35.7 million bales for the cotton year 2015-16 as against 38.27 million bales in 2014-15.
According to Dalal, as on January 31, 2016, about 17.02 million bales of cotton arrived across India which last year was 21.04 million bales at the same time. A leading cotton growing state, Gujarat witnessed a fall of about 1.5 million bales to 4.1 million bales this year so far as against 5.60 million bales in corresponding period last year.
Cotton arrivals in northern parts of the country were reported at 2.20 million bales against 3.70 million bales, while it was marginally down by 350,000 bales to 4.20 million bales in Maharashtra. So far, India has registered export orders of 4.7 million bales, out of which about three million bales has been exported mainly to Pakistan, Bangladesh, Malaysia and Indonesia.
| Arrival ( in million bales) | ||
| State | 31-Jan-15 | 31-Jan-16 |
| North Zone | 3.7 | 2.2 |
| Gujarat | 5.6 | 4.1 |
| Maharashtra | 4.55 | 4.2 |
| Madhya Pradesh | 1.02 | 1.07 |
| AP and Telangana | 4.55 | 4 |
| Karnataka | 1.1 | 0.82 |
| Others | 0.15 | 0.42 |
| Total | 21.04 | 17.02 |