Andhra cyclone effect: Cotton prices may rise

As crop damage is feared in AP with heavy rains expected due to cyclone 'Phailin'

Cotton prices are likely to firm up in coming days over fears of crop damage in third largest cotton producing state of Andhra Pradesh due to affect of cyclone ‘Phailin’ that has intensified in the Bay of Bengal.

The India Meteorological Department (IMD) has predicted very severe cyclonic storm to hit Odisha and Andhra Pradesh by October 12. The wind speed is likely to be 175-185 kilometers per hour.

After the political turmoil over formation of Telangana state, the cyclonic storm is feared to damage standing cotton crop in the state. Andhra Pradesh is the third largest cotton producing state in the country with a production of around 7-7.2 million bales of cotton in 2012-13 (provisional).

Cotton prices are currently ruling around ' 48,200 per candy (each of 356 kg), higher from ' 47,000 quoted last week. “This is an unexpected development. Cyclone is going to hamper cotton production in the state. First picking is over in many parts of the state, but quality will be a major issue after the unexpected rains,” said K Selvaraju, secretary general, The Southern India Mills’ Association (SIMA).

“Andhra Pradesh has a potential to produce around 10 million bales just like Gujarat. But unexpected factors including cyclone and political unrest is adversely affecting production prospects,” added Selvaraju.

Trader sources maintained that due to impact of the cyclone, the price sentiment is already upwards. “We expect prices to strengthen in coming days. Already, the prices are ruling at higher end of ' 48,200 per candy,” said a cotton trader and exporter from Ahmedabad.

After Gujarat and Maharashtra, Andhra Pradesh has the largest cotton sowing area of 2.14 million hectares, constituting around 18-20 per cent of India’s total cotton sowing. According to experts, newly announced state of Telangana is the cotton hub. Gujarat has a cotton sowing area of 2.4 million hectares, with cotton production of around 8.5 million bales (each of 170 kg), while Maharashtra produces around 8 million bales on sowing area of 4.13 million hectares.

“Around 60-70 per cent of Andhra Pradesh’s total cotton production comes from Telangana region. The cyclonic storm is likely to damage properties on the coastal region, while heavy rains due to the cyclone will affect the hinterland of Telangana,” said a source at Cotton Association of India (CAB).

“Cotton prices had touched a peak of ' 49,000 per candy. However, there was a slight decline last week. But again, we see prices to head northwards amid bullish sentiment due to cyclone,” said an industry source.

Phailin is a tropical cyclone that has emerged over the east-central Bay of Bengal and heading northwest wards. Originated from an area of low pressure over the Andaman Sea, cyclone Phailin would move close to Odisha coast by evening of October 12.

According to the latest weather forecast on Thursday, the cyclone storm is located at 800 km far in southeast region. Heavy to very heavy rainfall is likely in coastal districts of Odisha and Andhra Pradesh.