Cotton board sees record production

The cotton crop in India is estimated to be robust for the second year in a row, according to information from the Cotton Advisory Board (CAB). Cotton production is estimated to be 213 lakh bales in the forthcoming cotton season from October 2004-September 2005.

The production in the just concluded cotton season was 177 lakh bales at a size of 170 kg each. This is the highest production since 1996-97 when it was at 177.90 lakh bales. In comparison, last year the production was 136 lakh bales.

The opening stock for the current season is 24 lakh bales, roughly equal to two months consumption. The offtake is also expected to be good going by last year, according to a report by the Cotton Corporation of India.

The total area under cultivation is also estimated to have gone up considerably, to approximately 91 lakh hectare from 77.85 lakh hectare in the 2003-2004 season, and 76.67 lakh hectare last year.

Textile commissioner Subodh Kumar, said at the sidelines of the annual general meeting of Indian Cotton Mills' Federation yesterday, "The area under cultivation has increased substantially and at least 25 per cent of the crop is indicated to come from the southern region. The combined area under cotton in Tamil Nadu and Andhra Pradesh accounts for 40 per cent of the total crop." The last few years, there was a severe crop failure in these regions due to inadequate rains.

As the new season begins, the arrivals in Punjab and Haryana are healthy at 7000 bales per day, and are 4000 to 5000 bales per day in Gujarat. It is currently lower in Maharashtra and Madhya Pradesh at 1000 bales per day, but is expected to rise further.

Unlike last year however, analysts predict a drop in prices by roughly 10 per cent this year compared to previous prevailing prices as the supply situation is likely to pick up with good crop in US, China and Pakistan as well.

In the last year, cotton prices in India remained high and promised good returns to the farmers despite a a healthy crop locally which would ease the supply, as there was a global deficit. International pricing and weather conditions and exports and imports of raw cotton are key factors affecting the pricing.

The current prices of cotton are firm in the range of Rs 17,700 to Rs 18,700 per candy (335.62 kg) for short staple cotton in the growing areas of Punjab and Haryana. The medium to long staple cost is in the range of Rs 21,500 to Rs 21,700 in Gujarat. This is expected to soften in the coming year.

So far in the last six seasons, India has been a net importer of cotton, but exports that picked up in the last year are likely to keep up their tempo. Exports as well as imports are estimated to be 8 lakh bales in the current cotton season.

The consumption level is also expected to be good globally, especially in India and China where the scenario is likely to transform through the value-chain with the removal of quotas.