Cotton output to drop by 5 per cent

Kolkata: India's cotton production is expected to drop by over 5 per cent in the cotton season 2019 (October 1, 2018 to September 30, 2019) because of low water availability and inadequate south-west monsoon in key cotton producing states, along with lower yields owing to pest attacks.

Going by the latest Crisil report, lower production is expected to shrink India's cotton stock to a two-year low of 1.2 months by the end of CS 2019, leading to firming up of domestic cotton prices to Rs 128-140 per kg this fiscal, marking a rise of 7-8 per cent over FY19. Global cotton prices, though are expected to remain steady at Rs 128-134 per kg as lower production in India, the US and Australia will be offset by higher production in China and Brazil. This would narrow the gap between domestic and global cotton prices, the Crisil study felt.

According to the Cotton Association of India (CAI), total stock held by spinning mills and stockists as on April 30, 2019 is estimated at 87.75 lakh bales of 170 kg each, which is equal to about 93 to 94 lakh running bales.

Due to small crop size and a very tight cotton balance sheet, closing stock as on September 30, 2019 is estimated at 13 lakh bales.

The CAI has released its April estimate of the cotton crop for the season 2018-19 beginning from October 1, 2018. The cotton crop estimated by the CAI for the 2018-19 crop year now is 315 lakh bales, which is lower by 6 lakh bales compared to its previous estimate, of 321 lakh bales, released last month.

Atul S Gantra, President, CAI pointed out that the total cotton supply estimated by the CAI during the period from October 2018 to April 2019 is 314 lakh bales of 170 kg each which consists of the arrival of 278.73 lakh bales upto April 30, 2019, imports of 7.27 lakh bales upto April 30 2019 and the opening stock at the beginning of season on October 1, 2018 at 28 lakh bales.

Further, the CAI has estimated cotton consumption during the months of October 2018 to April 2019 at 183.75 lakh bales while the export shipment of cotton estimated by the CAI upto April 30, 2019 is 42.50 lakh bales of 170 kg each.

On the export-import front, the CAI projection of cotton export for the season is reduced from 47 lakh bales to 46 lakh bales on account of prevailing higher prices of Indian cotton and smaller crop size. Last year, cotton exports from India were 69 lakh bales. Thus, the cotton exports this year are estimated lower by about 33 per cent.

Import of cotton has been projected at 31 lakh bales compared to the last year's import of 15 lakh bales. Thus, the cotton imports this year are estimated higher to be more than double compared to that of last year, Gantra mentioned.