Cotton counter looks up on increase in export demand

Indias output likely to drop for second year on fall in yields, delayed sowing -

July 14, 2015 There has been a sudden spurt in export demand for cotton from some of the overseas markets, which has helped firm up cotton prices in recent times. While prices of the benchmark Shankar 6 variety has jumped three per cent to Rs 9,617 a quintal from Rs 9,336 nearly two-three weeks ago, cotton futures for near-month delivery saw 1.3 per cent gain at Rs 9,665 a quintal on the Multi-Commodity Exchange. The market hopes for even higher demand in the days ahead.

However, Indian Cotton Federation (ICF) feels export demand still remains sluggish. With China, the top destination for Indian cotton, remaining inactive in importing the commodity, exports are unlikely to see significant growth this year. In the 2014-15 season that started in October 2014, the cotton supply situation is likely to remain the same as in the 2013-14 season, ICF feels.

Cotton is predominantly a monsoon or kharif season crop. It is planted from the end of April through September and harvested during the winter. India accounts for about one-third of the global cotton area. Two-thirds of Indias cotton is produced in states like Odisha, Maharashtra, Madhya Pradesh and Gujarat, where much of the crop is rain-fed. North India, comprising Punjab, Haryana and Rajasthan, produces cotton under irrigated conditions and accounts for 15 per cent of total production. Andhra, Karnataka and Tamil Nadu contribute 30 per cent down south.

The latest cotton report released by the US department of agriculture (USDA) suggests Indias cotton output is expected to decline for the second consecutive year to 37.5 million bales in the marketing year 2015-16 mainly due to a likely drop in yields on account of delayed sowing, weather issues and low realisations.

For the 2014-15 marketing season (August-July), USDA has forecast cotton output to be 38 million bales, while the government has projected it at 35.3 million bales (one bale equals 170 kg of cotton).

Indias cotton output is projected to be 37.5 million bales from 12 million hectares harvested, the USDA report said. The Cotton Advisory Board, on its part, said the countrys total production during 2013-14 stood at 39 million bales and ICF estimates the production for 2014-15 at around 38.7 million bales.

These numbers need to be seen in the light of the recently-released report of the International Cotton Advisory Committee (ICAC), which said the worlds cotton area is expected to decline by 6 per cent to 31.3 million hectares in 2015-16 due largely to lower prices in 2014-15. In India, the cotton area is projected to decrease by 5 per cent to 11.6 million hectares in 2015-16, the report said, adding that, falling prices for competing crops and a modest increase in the MSP may forestall a greater decline.

India exported 90 lakh bales of cotton in 2013-14. Exports are likely to end up at nearly 45 lakh bales this year with 35-37 lakh bales already exported as of June 30.

According to textile industry sources, India is losing its market share in cotton and man-made fibre (MMF) categories, as most of the products are made of coarse cotton yarn and MMF prices are at least 25 per cent higher than the rates prevailing in the competing countries. Under the make in India initiative, the government has lined up an ambitious plan for putting up a modern apparel/garment manufacturing centre in each of the northeast states. Analysts feel the focus on domestic manufacturing should raise local demand of cotton considerably.

ritwikmukherjee@mydigitalfc.com

Share to ....: 903    


Most viewed


Short Message Board

Cotton Live Reports

Todays Arrivals and Avg.Price

Cotton Variety Wise Summaery

Cotton State Wise Summaery

Weather Forecast India

Visiter's Status

Visiter No. 31700830

Saying...........
Miller-s Law: Exceptions prove the rule - and wreck the budget.





Cotton Group