India is expected to harvest a record cotton crop of around 16.7 million bales (one bale is 170 kg) in the 1996/97 season (October/September), up from 16.27 million in the previous year, traders said on Thursday.
They said most cotton-producing states had reported higher production following good weather conditions during the year.
Maharashtra and Gujarat in western India harvested 5.0 million bales and 3.5 million respectively in 1996/97 after the previous year's 4.5 million and 3.2 million, traders said.
A national conference of trade organisations affiliated to the East India Cotton Association (EICA), an apex agency, are meeting in Bombay on Saturday to estimate the 1996/97 crop.
The meeting is also expected to discuss impending futures trading in cotton and the need for setting up a technology mission to raise productivity, traders said.
The 1997/98 (April/ March) federal budget had proposed the re-introduction of futures trading in cotton after a gap of 30 years.
Futures trading in key commodities, including cotton, was banned in the early 1960s in a bid to curb speculation and stabilise prices.
An official committee, set up to suggest a mechanism to implement futures trading in cotton, is expected to submit its report shortly, traders said.
Low productivity in cotton has been a major worry for farmers and the government. The average Indian cotton yield of about 310 kg per hectare is far below the world average of 570 kgs and compared with Australia's 1,300 kgs per hectare. In the week to Thursday, cotton prices made further gains due to falling arrivals as the current season nears closure.
Most of the crop harvested in the 1996/97 season will have arrived by July, traders said.
A shortage of ready stock also pushed up cotton prices on the Bombay market during the week, they said.
"Demand from cotton and yarn mills has been dull but as prices started rising they turned active buyers," said Mahesh Thakkar, a leading dealer.
"Most spinning mills have secured export orders for cotton yarn and they are buying up quality cotton at any price to meet their commitments," Thakkar said.
In spot, Punjab saw-ginned rose 55 rupees to 1,830/1,900 rupees per maund (37.32 kg) and F-414 gained 25/30 rupees to 2,040/2,060 rupees per maund.
Bengal-deshi moved up by 70/80 rupeesto 1,050/1,080 rupees per maund.
"We are witnessing a shortage of good quality cotton due to the fag end of the season," one trader said.
