The Cotton Association of India (CAI) on Thursday cut its cotton crop forecast by 465,000 bales to 29.8 million bales for the 2022-23 season as production is expected to decline in Maharashtra, Telangana, Tamil Nadu and Odisha. The latest estimate of cotton crop is the lowest since 2008-09 season at 29.0 million bales.
At the start of the season, the association had estimated cotton crop production at 34.4 million bales as against 30.7 million bales in the previous season. CAI's latest crop down revision is against its March estimate of 31.3 million bales.
The reason for the continuous cut in the estimates is being attributed to lower cotton offtake due to change in weather patterns. “3-4 pickings of cotton were expected in states like Maharashtra, Gujarat, Madhya Pradesh and Telangana. However, only two selections have taken place so far, said a Mumbai-based industry expert, seeking anonymity.
Besides this, it is also estimated that farmers are holding their produce in the hope of remunerative prices as in the previous year. Cotton prices have crossed ₹100,000 per candy (1 candy = 365 kg) in the 2021-22 season. Currently, cotton is trading in the range of Rs 59,000-62,000 per candy in key markets of Rajasthan, Maharashtra, Telangana and Andhra Pradesh and Rs 61,900 per candy on the Multi Commodity Exchange.
Due to less attractive prices compared to last year, this year's arrivals have come down to 17.86 million bales so far in the current season that started October, as against 24.4 million bales during the same period last year.
“Domestic ginners and spinners are working in face-to-face conditions as farmers are bringing less produce. This is the reason why the market is range bound. Prices are not going up or down," said Ajay Kedia, director of Kedia Commodities, a financial services firm on commodities.
As far as the demand-supply dynamics are concerned, prices should move up amid reduction in cotton production. "Despite the decline, cotton prices in the domestic markets have not picked up due to sluggish demand amid fears of a slowdown," Kedia said. Cotton prices were maintained in the domestic market as well." Bangladesh is the largest buyer of Indian cotton.
CAI has retained its cotton import forecast at 1.5 million bales as against 1.4 million bales recorded last year. According to CAI data, around 700,000 bales have arrived at Indian ports so far this year. On the other hand, exports are estimated to decline by 500,000 bales to 2 million bales in the 2022-23 (October-September) season.
The estimated domestic cotton consumption for this season is around 31.1 million bales, as against 31.8 million bales last year. Total availability of cotton is estimated at 34.5 million bales, which includes opening stock of 3.2 million bales and imports of 1.5 million bales. However, this left an estimated production of 29.8 million bales. The carryover stock at the end of the season is estimated at 1.4 million bales.
