CAB may reduce cotton consumption, recommend exports

The Cotton Advisory Board (CAB) is expected to recommend further export of cotton, on the back of surplus availability. A decision would be taken after a meeting of various stakeholders next week.

The CAB is expected to show two million bales (one bale is 170 kg) of surplus, preparing ground for the Union textile ministry to declare a fresh export quota.

The prices of cotton have declined 25 per cent in the last month, from Rs 62,000 a candy (one candy is 356 kgs) to Rs 47,000 a candy. The fall has already sent a negative message among farmers, for diverting their land to more remunerative crops such as fruits and vegetables which gave handsome returns through last year.

So far, 5.5 million bales have already shipped during this cotton year (October-September).

The textile ministry has asked AB Joshi, CAB chairman and textile commissioner, to prepare a revised cotton balance sheet. He was not available for comment.

A leading trader said the total output last year was 30.8 million bales, from the earlier estimates of 29.5 million bales. Hence, the industry has 1.3 million bales of surplus from the last year's output. There is a possibility of pruning mill consumption estimates this year to the extent of 700,000 bales, he added.

According to the CAB's last estimate on February 26, total mill consumption was estimated at 23.2 million bales, 12 per cent higher than last year's figure of 20.7 million bales. According to industry sources, mills consumption will be reduced to 22.2 million bales for the 2010-11 cotton year.

The CAB, however, had warned that 2.75 million bales of closing stock for 2010-11 is alarmingly low from the normal comfortable level of four million bales. But, the closing stock is unlikely to change with the restructuring of consumption data and export dynamics.

The trader believes the government should announce registration of additional cotton now so that farmers would be encouraged to continue with cotton sowing in the ongoing kharif season, as delay may harm sowing.

India's cotton yield plunged from 554 kg a hectare in 2007-08 to 475 kg a hectare in 2010-11. The acreage area under cotton, in contrast, has risen from 9.41 million hectares in 2007-08 to 11 million hectares 2010-11.

M B Lal, a veteran trader, said last year's higher output may be set-off by mills' claim of additional consumption. Hence, there will be no room for held-over output from the last year.