Cotton body reduces crop estimate by 1 million bales

Cotton Corporation of India has revised down estimates of cotton output for 2006-07 (Oct-Sep) to26-26.5 million bales (one bale=170 kg) from 27 million bales earlier projected, an official said.

"Our field officers have made an estimate of cotton crop and based on their report we feel that the country's output will be lower than earlier estimated," Managing Director Subhash Grover said.

In 2005-06, the country's produced 24.4 million bales of cotton. Cotton Advisory Board, which had estimated India's cotton output at 27 million bales, is slated to meet on Friday to announce its second estimate. Industry sources feel the board may revise output estimates downwards. So far, 22 million bales of cotton have already arrived into the market across the cotton growing areas, Grower said.

Cotton production in the states of Gujarat, Punjab, Haryana and Rajasthan is likely to be lower than earlier estimates leading to the revision in output projections, Grower said. Unseasonal rains in these states towards the end of the growing stage may have affected output slightly, industry sources said. Cotton Advisory Board had estimated Gujarat's cotton output 9 million bales, Punjab's at 2.7 million bales, Haryana's at 1.5 million bales, and Rajasthan's at .8 million bales for 2006-07.

Domestic cotton prices have been firm despite a bumper crop, Grower said. "In the last one month, cotton prices have risen by Rs 1,000-1,500 a candy (1 candy=356 kg). Overseas cotton prices have risen 3-5 cents per pound," said Grower. On Tuesday, Gujarat Shankar 6 was at Rs 19,300 a candy. Demand for cotton has been very strong especially from mills.

"Spindles are being added almost every day because of strong demand for downstream products. Also, mills that were waiting for prices to fall have started to cover up," Grower said. Mill consumption, according to the Cotton Advisory Board, is seen at 20 million bales in 2006-07. "Although no exports have taken place so far, India should export 5 million bales of cotton by the end of the season as estimated by the Cotton AdvisoryBoard," Grower said.