The Cotton Association of India (CAI) has declared its first cotton crop estimate for the season beginning October 2019 with a larger crop size at 354.5 lakh bales (each of 170 kg), higher by about 42.5 lakh bales, as against 312 lakh bales reported in 2018-19.

The increase in cotton crop estimates for the 2019-20 season is due to the higher acreage compared to that of the previous season. Government data shows the total cotton cultivation for the current kharif season is at 127.67 lakh hectares, which is about 7 lakh hectares more than 121 lakh hectares reported last year.

"Moreover, the CAI estimates yields to be higher as the country has received a good rainfall this year. However, there are reports of damage to the crop in some pockets due to flooding on account of excess rains. Keeping this in mind, increase in crop is restricted to 13.62 per cent," Atul Ganatra, President, CAI said in a statement.

In the new season, the total cotton arrivals for the month of October 2019 are estimated at 13.40 lakh bales.

Cotton supply

The yearly balance sheet shows the total cotton supply for the season ending September 2020, is at about 403 lakh bales. The opening stock at the beginning of the season was at 23.5 lakh bales, while imports are estimated at 25 lakh bales.

The domestic consumption is estimated at 315 lakh bales, while the exports are estimated at 42 lakh bales. The carryover stock estimated at the end of the season is 46 lakh bales.

However, the US Department of Agriculture (USDA) in its outlook on India's cotton crop released last month had estimated India's cotton crop at 305 lakh US bales (each of 217.7 kg), which works out to 390 lakh India bales (each of 170 kg).

"Production in India - the leading cotton producer - is forecast at 30.5 million bales, 15 per cent above 2018-19 and the second highest on record, as both area and yield in 2019-20 are expected higher. Harvested area in India is projected at a record 12.9 million hectares in 2019-20, as domestic prices and internal support price prospects favor cotton over competing crops," USDA stated in its international outlook on cotton crop, which was released on October 15, 2019.

Fall in prices

Meanwhile, the current price levels indicate a downward trend following projected higher crop size than last year.

Ginned cotton for 29 mm variety quoted around Rs 41,900 per candy (of 356 kg each), while internationally, ICE Futures for December was stable at 60.83 cents for a pound.