Cotton board sees 10% jump in production

MARKET OUTLOOK

The Cotton Advisory Board (CAB), the state-owned body to estimate cotton production and consumption, expects production in the October-September season to go up to 270 lakh bales (1 bale = 170 kgs). This is 10.65 per cent higher than last year's estimated production of 244 lakh bales.

The board has attributed the increase to crop shift from other agri products to cotton, mainly in the major producing states such as Gujarat and Punjab.

The carryover stock is estimated at 45 lakh bales for 2006-07 as against 56 lakh bales for 2005-06. Analysts say that the low level of carryover stocks could push up prices.

Chandubhai Thakkar of Perfect Cotton says prices may see an upward trend from the second half of January. However, everything depends on the demand from China and the domestic textile sector which has been showing a sluggish trend of late but could firm up in the second half of January. China has a huge appetite for cotton - consumption has increased from 6 million tonne in 2002 to 9.7 million tonne in 2005.

Correspondingly, imports by that country have risen by 53.15 per cent in 2006 to reach 3.40 million tonne. According to a report by the US Department of Agriculture, world cotton production is expected to increase by 1.7 million bales to 115.9 million bales and consumption is forecast to go up by 5 per cent to 121 million bales.

J N Singh, textile commissioner and the cotton advisory board's chairman, says prices are expected to remain firm despite the 10 per cent higher production estimated for this year. Higher fibre consumption in the domestic market due to capacity additions and lower production in Pakistan, US and China are the reasons for this, he says.

According to the figures released by the board, Maharashtra's production will go up by 52 per cent to 55 lakh bales (36 lakh bales) while Punjab is likely to produce 35 per cent more cotton to 27 lakh bales this season.