Production estimated at 325 lakh bales, exports pegged lower

M.R. Subramani

Chennai, Aug 30

It's official now. Cotton production for the season beginning October is expected to be upwards of 325 lakh bales (of 170 kg each). The production comes on the heels of the acreage under the fibre hitting a record of over 106 lakh hectares.

The production expected for the next season is against 283 lakh bales estimated for this year. The official projection has been made by the Cotton Advisory Board (CAB) that has representation from the Government, industry, trade and growers side. The estimates were made at a CAB meeting last weekend.

According to the CAB, production has been pegged at 325.48 lakh hectares with 106.12 lakh hectares being expected to come under the crop.

But exports could be lower at 49.50 lakh bales against 83 lakh bales this year.

Mr Basant Vaid, Senior Research Analyst of Bonanza Commodity Brokers (Pvt) Ltd, said with acreage being 10 per cent higher than last year, the crop would surely be above 325 lakh bales.

Some traders are a little more bullish, hoping the crop could be around 330 lakh bales.

Carryover stocks

However, one worrying factor is the drop in carryover stocks to 40.50 lakh bales from 71.50 lakh bales this season.

Gujarat, which has emerged as the key cotton-growing State in the last few years, is expected to contribute nearly one-third of the estimated output. Production in the western State is expected to be back above 100 lakh bales at 106 lakh bales next season. This season, it produced 98 lakh bales.

Maharashtra, where the area under cotton is the highest in the country, is projected to produce 77.31 lakh bales, up 15 lakh bales over this season. Andhra Pradesh is also expected to contribute significantly to the output, producing 65.68 lakh bales.

Domestic consumption

The CAB has pegged domestic consumption at 246 lakh bales against 230 lakh bales this year. The estimate of 49.50 lakh bales could be the board's estimate of surplus cotton.

Despite the exports and rising domestic demand, the carryover stocks could be higher at 55 lakh bales from the next season.

Mr Vaid said crops in the US, China, Brazil, Turkey and other producing countries are also higher than the previous years for possible reason for projections of lower exports.

According to him, domestic prices could be under pressure due to the record crop, possibly affecting growers.

However, prices will sustain above the minimum support level fixed by the government in view of steps to lift export ban.

Prices could further be supported if the millers raise their inventories finding it attractive to procure at the lower cost.

A curious factor, though, for the next season is that total supply is seen down at 370.50 lakh bales, primarily on account of the low carryover stocks.

Imports, too, are seen down at five lakh bales (7 lakh bales).