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Cotton production up by 12%, estimated at 35 million bales by September: CAI
Domestic cotton prices are likely to remain subdued in the third quarter of the current fiscal. Because there is fresh arrival of cotton in the markets of major cotton producing states. The Cotton Association of India has estimated the production to be 34 to 35 million bales by September with a 12 per cent increase in cotton production in the season 2022-23. While the production during the same period last year was 30.7 million bales (per 170 kg).
Good arrivals expected by December
Awadhesh Sejpal, president of All India Cotton, Cotton Seeds and Cotton Cake Brokers Association, says fresh arrivals of cotton have started in Gujarat and other cotton growing states, but farmers are still reluctant to sell their crop at the current rate. Because they have seen cotton being sold at a price of up to Rs 1,10,000 per candy. , As a result, on an average around 3 million bales of cotton are reaching Gujarat mandis on a daily basis since the last week of October. “We are expecting a huge quantity of cotton arrivals during the December-January period. The cotton prices will be determined in the coming days on the holding capacity of the farmers and the demands of the export as well as the domestic textile industry.
Indian cotton is still expensive
According to a recent report by India Ratings and Research (Ind-Ra), the estimate of higher production of cotton is supported by 7% more area under cultivation in the current domestic cotton season. The report claimed that with domestic and global consumption likely to be lower than last season, a supply surplus is expected which is likely to weigh on prices. The report claimed that although Indian cotton and international cotton prices have come down by about 50%, Indian cotton remained more expensive than international cotton during October this year.
this is the situation
According to CAI President Atul Ganatra, the price of cotton in the domestic market is around Rs 65,000 per candy (356 kg), while at the International Cotton Exchange (ICE) it is Rs 51,000 per candy or 78.5 per cent. “In fact, some MNCs are engaged in selling contracts for the month of January at Rs 59,000-60,000 per candy in the domestic market. They are hedging their risk by taking the ICE January contract at Rs 50,000 or 78 per cent. This activity is dangerous for the entire textile value chain, especially for spinners and yarn buyers,” says Ganatra.
hard to export
Gujarat's Spinners Association (SAG) secretary Gautam Dhamsania says spinning mills across India are expecting and waiting for a further fall in domestic cotton prices. 40% of India's total production of cotton yarn is being exported. “The spread between international and domestic cotton prices determines the competitiveness of Indian yarn spinners. While global cotton prices fell 17% between April and August this year on expectations of higher production, domestic prices rose 2% during the period due to limited supplies. Precious domestic cotton reduced India's competitiveness, leading to loss of export market share to China and Bangladesh,” says a recent report by Crisil Ratings.
Mohit Makhija, senior director, Crisil Ratings, says higher cotton production should cool domestic prices and allow spinners to gain some export competitiveness, but sluggish yarn demand from Pakistan and Vietnam amid stagnant global production. Due to this, international cotton prices may fall.
















