Fall in yield fuels demand for cotton in Saurashtra

The Saurashtra region is flooded with orders for purchasing cotton from exporters and ginners.

The cotton trade plunged into trouble last week as the Bharatiya Kisan Sangh (BKS) had given a call for strike demanding minimum support price for cotton. After the strike was called off, the procurement started early this year in right earnest.

With BKS demanding minimum support price of Rs 400 per quintal as against Rs 270 per quintal, a majority of ginners and exporters from across the region have also decided to procure their share of cotton early.

"The reason is short supply of cotton and unwillingness of traders to wait further and pay higher price in case of any natural calamity," said Ravjibhai Patel, trader from the Rajkot agriculture market.

Prices at the Rajkot market range between Rs 365 and Rs 465 per quintal, and are Rs 5 on the higher side as compared with the closing prices "" Rs 360 to Rs 460 per quintal.

At the All Gujarat Cotton Ginners Association (AGCGA) meeting held in August, tentative estimates projected an yield of 275 lakh bales of cotton in the country this year. Of this, 120 lakh bales of yield is estimated from Gujarat alone.

"In view of climatic imbalances and natural calamities, which have already disturbed the cultivation pattern in south and north Gujarat, the tentative estimated yield of cotton is pegged at 105-110 lakh bales as against the initial projections in the state," said Dilip Patel, president of AGCGA.

With reports of some imbalance in climatic conditions, partial deficit has also been registered in the harvest of cotton this year.

As a result, for every 30,000 bales' demand per day, there is a deficit of at least 5,000-7,000 bales. The demand-supply gap has compelled ginners and exporters to book their orders, despite the fact that the arrival of cotton is likely to shoot up after Diwali in the state.

According to tentative estimates by a commodities research firm, consumption of cotton is in the order of 121.694 million bales as against the supplies of 115.590 million bales. China is likely to contribute 27.5 million bales, India 21 million bales, US 20.4 million bales, Pakistan 10.5 million bales, Brazil 5.5 million bales, Uzbekistan 5.1 millions and the rest 25 million is expected to come from from other countries.

"Though China's production has increased by 5 per cent over that of last year, its consumption has increased by 10 per cent. Similarly, there is a supply shortage in the US as 25 per cent of the crop in that country is reported to have been damaged. Consequently, there is a possibility of cotton export boom from India this year," says Prerna Desai, senior research analyst from Man Financial Commodities India Pvt Ltd.

"We foresee export of 50 lakh bales from India this year," added Prerna.

"Currently, there is a huge demand for Indian cotton from China as also from Bangladesh and Mauritius," said Jatin Bhindora of Samir Traders.

Auguring well for cotton, the price has also shot up in the international market to Rs 20,500 from Rs 18,500 last year per a 358-kg bale of cotton.