Monsoon helps beat cotton harvest estimates

The last part of a series on kharif crop looks at cotton

Despite less area under cotton, a good monsoon is expected to rescue the 2016-17 production. People in the industry are estimating 35.5 million bales (170 kg each) for the season 2016-17 (October-September), as against the government’s first estimate of 32.12 million bales. The Cotton Association of India has estimated 33.6 million, as against last year’s 33.7 million bales.

“The monsoon was good during the entire sowing period. We assume production at 35-35.5 million bales. However, exports might not rise, due to subdued demand from China and Pakistan, due to geopolitical tension and higher stocks,” says Govind Sharda, president of Nandan Denim.

In 2015-16, the government had estimated 30.14 million bales, against the actual 33.7million. The area under cultivation, however, has been falling. The Union government’s department of agriculture says sowing was complete on 10.27 million hectare as on end-September, as against 11.64 million in the corresponding period of 2015. Many in Punjab, Rajasthan, Gujarat, Madhya Pradesh, Maharashtra and the south shifted to pulses and soybean from cotton, as the latter did not yield the expected return, while prices of the pulses remained high the entire year.  

“Earlier, almost 70 per cent of my land was used for cotton sowing but prices were not as lucrative. This year, only 40 per cent of the land is being used for cotton,” says Ramesh Bhoraniya, a farmer from Naranaka village of Rajkot district in this state.

There has been a sharp rise in prices as well. At the start of the earlier (2015-16) season, the price was Rs 35,000-36,000 a candy (356 kg). This season opened at Rs 43,000-44,000 a candy. Kapas or raw cotton prices are marginally up to Rs 980-1,100 per 20 kg as against last year’s Rs 800-900 per 20 kg.

Bhagwan Bansal, president of the Punjab Cotton Ginners Association, feels with most mills lacking stock due to less production last year, this could push mill demand in the coming months.  

According to Arvind Pan, managing director of Jaydeep Cotton Fibres, ginners are also hopeful that the business will be profitable this year, due to the lower difference between prices of cottonseed and cottonseed meal (a byproduct after ginning used for animal feed and fertiliser).  Yarn mill demand could be hit, with the sluggish export market. “For the past couple of months, demand has been dull due to sluggish export. Hence, mills are shying away from creating longer-duration stocks. Their buying will depend on international demand and might be lower if they see no global business coming in the short term,” said KN Viswanathan, vice-president, Indian Cotton Federation.

RAINS RESCUE COTTON

• Cotton may trade in the range of Rs 36,000 to Rs 40,000 during the season
   
• Export demand from Pakistan is  not expected
   
• Farmers getting 37% higher prices for cotton this season
   
• Quality in the second and third cycle cotton crop likely to be better than last year
   
• Yield of cotton is expected to improve 17 per cent
   
• Mills may not create big inventory as global demand is lower