CNBC interview with the president of CAI (1/7/24).
QUESTION:
How do you see cotton sowing for the new season in India?
ANSWER:
About 50-55% of the 60 lakh hectares have been sown so far, which is more than last year at this time. The main reason for this is Maharashtra having sown 20 lakh hectares so far, which is a little earlier than last year. So, we may see more sowing this time. We will have to wait till July 20-25 to know the actual total sowing.
Cotton sowing in North India has gone down by about 40% to 50%. There are also reports from Gujarat that cotton sowing is down by 15-20%. Sowing in Khandesh and Vidarbha of Maharashtra may be down by 5-10%, but the sowing area in Marathwada will remain the same.
Looking at the trend of farmers in North India and Gujarat, we can say that total cotton sowing in India will go down by 10-15%. The main reason is that the income of farmers in cotton sowing has decreased because the labor cost has increased and the production (yield) is very low. I read a research that in Gujarat if farmers grow peanuts they get Rs 50,000-60,000 per acre, while cotton only gives Rs 20,000.
Where there is no water facility, farmers have no option other than cotton. And those who have water facility have many other options other than cotton. Looking at the trend of North India and Gujarat, we can say that there will be a 10-15% reduction in total cotton sowing in India.
QUESTION:
Which states are included in North India?
ANSWER:
North India includes Punjab, Haryana and Rajasthan. In Rajasthan, cotton sowing is done in lower Rajasthan and upper Rajasthan. So far this year, sowing has been done in 4.5 lakh hectares in Rajasthan, while last year sowing was done in 10 lakh hectares, so we can say that sowing in Rajasthan is 50-55% less.
QUESTION:
We have heard that the ministry is going to allow new seed technology. Will the new seed be used for sowing this year, or how long will it take?
ANSWER:
We have also received news of new seed permission on WhatsApp like you, but we do not have any official confirmation yet. If we get any official confirmation, we will inform the trade. Sowing of new seed is impossible this season as the sowing time will end by the end of July.
If the new seed gets permission, it will be tested first, and only after the test is successful, the government will give the new seed to the farmers. Apart from this, the central government will have to take approval from all the states where cotton is grown. New seed will be given to the farmers only after getting approval from all the states. Considering this, it is a long process and it will take time.
QUESTION:
MSP has increased by 7%, cotton sowing has started. How is the cotton balance sheet of CAI and the demand from mills?
ANSWER:
This year cotton production and consumption are in similar numbers, around 318 lakh bales. Cotton exports are estimated at 26 lakh bales and imports at 16 lakh bales, so this export-import gap will reduce from last year's closing stock by around 10 lakh bales.
The demand from mills is good, the demand from spinning mills is good, and mills are making a profit of Rs 5 to Rs 15 per kg of yarn. Cotton is also readily available and rates are reasonable. Indian mills are currently running at 90-95% capacity. Cotton mills in North India and Central India are running at 100% capacity.
QUESTION:
Volatility of 2-4% in ICE futures has become normal. What is its impact on the Indian market?
ANSWER:
Yes, I agree 100%, there is huge speculation going on in ICE futures. 2 months ago ICE futures went up to 103 cents and today it is at 72-73 cents, which is a drop of about 33%. But in India the prices have gone down by only Rs 3,000-4,000 as we have huge consumption of cotton. Also the arrival of cotton is almost over and CCI and ginners have very limited stock, so whatever price the stockers set, mills are buying. Mills will run in this limited stock for the next 3-4 months. This huge fluctuation in ICE is not having a good impact on the entire textile industry as the world market is following ICE futures.
Read more :- Chinese Share of Indian Yarn Exports More Than Doubles in FY24
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