Textile value Chain

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ITI ESTIMATES COTTON CROP TO BE 343 LAKH BALES FOR 2018-19

 

Shri Sanjay K Jain, Chairman, Confederation of Indian Textile Industry (CITI), stated that the Cotton Advisory Board (CAB), had estimated the Cotton Crop to be 361 lakh bales on 22nd November 2018. However subsequently based on the arrivals and crop situation, CITI feels that the cotton crop may go as low as 343 lakh bales. Today, there is a great amount of uncertainty regarding the estimation of cotton crop situation in the country causing great hardship for value added textile industry, especially for the Spinning Industry. There are rumours doing the rounds in the media indicating a very low crop estimation which is creating chaos in the market and prompting people to stock cotton in anticipation.

 

The chart gives below the cotton crop situation during last 12 years and based on the same an extrapolation has been done based on different scenarios.

 

Crop year

Area sowing lakh hec.

Crop size in lakh bales (170 kgs)

Yield/ hectare (in kgs)

Sowing for 2018-19 (Oct-10)

Crop size if yield is like Corresponding yr (in lac bales)

2006-07

91.44

280

521

122.38

375

2007-08

94.14

307

554

122.38

399

2008-09

94.06

290

524

122.38

377

2009-10

103.10

305

503

122.38

362

2010-11

111.42

339

517

122.38

372

2011-12

121.78

367

512

122.38

369

2012-13

119.78

370

525

122.38

378

2013-14

119.60

398

566

122.38

407

2014-15

128.46

386

511

122.38

368

2015-16

118.77

338

484

122.38

348

2016-17

105.00

345

559

122.38

402

2017-18

124.29

370

506

122.38

364

 

 

 

 

 

Crop estimate for 2018-19 under different conditions

AVERAGE OF 12 YEARS

523

122.38

377

AVERAGE OF LAST 10 YEARS

521

122.38

375

AVERAGE OF WORST 5 YEARS YIELD

503

122.38

362

AVERAGE OF WORST 3 YEARS

498

122.38

358

AVERAGE OF WORST YEAR

484

122.38

348

             

 

It, thus, clearly shows that even if we assume the yield to be the worst in 12 years, the cotton crop would be at 348 lakh bales.

 

Chairman pointed out that drought in many cotton growing regions of Gujarat, a few regions of Maharashtra and a few areas in other cotton growing states has affected cotton yield. Accordingly, CITI has revised the cotton crop estimates for 2018-19 based on the actual data collected from the cotton growing areas in the country to 343 lakh bales of 170 kgs.

 

The fresh balance sheet drawn by CITI is as follows:

 

PARTICULARS

 

 

Lakh bales of 170kgs

Opening stock

36.00

Production

343.00

Import

24.00

TOTAL SUPPLY

403.00

Total consumption including SSI & others

316.00

Export of Raw Cotton

47.00

TOTAL DEMAND

363.00

Available Surplus

40.00

Closing stock

40.00


Mr. Jain stated that though, we have a smaller crop size this year in comparison to last year, the cotton supply position is very comfortable with a big ending stock of 40 lakh bales. Thanks to a big opening stock, smaller exports and large imports, the production deficit is well covered. CCI has also started selling its stock, which will further increase liquidity in the cotton market.

 

He further stated that the prices started high in the season start, but later fell by 10% due to good availability of cotton in the market. The fall was limited due to the high MSP levels (due to steep increase in same by the Government). The high MSP levels have given confidence to stockists that market cannot fall beyond a point plus the hope that China-USA trade disputes may settle down soon, has led to the sudden spurt in prices despite an appreciating rupee. This rise has been partly supported by the increase in international prices, however, Indian prices have increased much more (12% in just over a month) which is due to the news floating around that India will be severely short of cotton. CITI is fully confident that India will have no shortage of cotton in 2018-19 despite an all-time low yield.

 

Mr. Jain observed that as far as crop situation for next year is concerned, the highly remunerative kapas prices during the current year and the monsoon projection would induce the Indian farmers to prefer to grow more cotton.

 

Chairman-CITI concluded by saying that International Cotton Advisory Committee (ICAC) the apex organisation of Cotton in their report for April 2019 have projected an increase of 6% in global production for 2019-20 at 27.6 million tons. They have projected a higher ending stock for 2019-20.  Due to these factors, cotton prices are likely to remain steady and range bound. Early monsoon and import arrivals in India may create downward pressure on cotton prices from June 2019.

 

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