Business

Industry Sees A Cotton Crop Bounty

Supported by the good South-West monsoon this season, India is set to witness a robust cotton output, which is likely to be 10-12% higher as compared to previous year. This is in stark contrast with the government's lower first advance estimate of 322.73 lakh bales (each of 170 kg) as against the last year's production of 337.25 lakh bales.

Speaking at the 95th Annual General Meeting of Cotton Association of India (CAI), recently, Nayan Mirani, outgoing president of the association, stated that the country will witness robust cotton output during 2017-18 on account of good monsoon.

"The Ministry of Agriculture estimated the acreage under cotton during the 2017-18 season (October-September) with a growth of over 12% compared to last year. Yield is also likely to go up in view of the good monsoon witnessed across all cotton growing regions thus far. If the weather Gods remain kind in future as well, the country is likely to harvest a bumper crop during the ensuing 2017-18 crop year," stated Mirani. The International Cotton Advisory Committee (ICAC) has predicted 8% higher world cotton production at 24.9 million tons, while the global acreage is set to increase by 8% to 31.7 million hectares. ICAI stated that India would remain the world's top cotton producer in 2017-18 with output rising 6% to 6.1 million tons. In India, cotton was sown on 121 lakh hectares as on early September 2017, as against 102 lakh hectares last year. Gujarat continues to be the largest cotton growing region in the country with 26.36 lakh hectares (24.04 lakh hectares).

Prices may come down

Increase in acreage, nationally, will result in bumper crop, putting pressure on the cotton prices in the new season. "Inspite of the reports of major crop loss in the US due to cyclones, crop size there is still expected to be large. Other countries are also expected to harvest a bumper crop. Therefore, cotton prices are likely to witness a depressing trend," added Mirani.

ICAI too has predicted uncertain cotton prices for the year 2017-18. The benchmark Cotlook A index is likely to hover around 69 cents/lb during the year. Currently, global cotton prices started lower trend on robust global crop. The prices started falling from 74.88 cents on September 5 to 68.31 cents per pound on October 2.

On the domestic spot market at Rajkot, cotton prices have corrected by about Rs 1,200 per bales within a month to quote at Rs 18,902 per bale on September 29, as against Rs 20,293 per bale on August 31.

However, Mirani added that in order to meet any eventuality of cotton prices going below the MSP level due to bumper crop expected this year, the government agencies are geared up to undertake support price operations so as to eliminate the possibility, if any, of distress sales by farmers.