By: Seshadri Ramkumar, Texas Tech University, USA
January 24, 2017
India is estimated to produce 34.1 million cotton bales (170 Kgs each), this season (October 2016-September 2017). Mumbai-based Cotton Association of India (CAI) yesterday, released the estimate, as the country was experiencing steady increase in cotton price. The total available supply this year will be 40.4 million bales.
While there will be slight increase in crop production this year by about 300,000 bales against last year, organized sector mill consumption will decrease and will be about 25.6 million bales. Last year, mills’ estimated consumption was about 27.5 million bales. The current year will end with a surplus of about 11.4 million bales.
Given that production will remain almost same as last year, with the expected lower consumption, based on demand-side economics, price should not see steady rise. However, the lack of supply during the current peak arrival timeframe is the main cause for such price volatility.
Nayan Mirani, the President of CAI has stated that the arrivals during this season are estimated to be lower than those during the same timeframe last year. There is a consensus among marketers and mill people that farmers are stockpiling kapas cotton to realize more value, which is resulting in drastic price fluctuations.
Another issue that is causing concern among mills in the State of Tamilnadu is the quality of cotton due to some mix up with combern oil and other waste cotton, according to a technical source from a reputed spinning mill. The quality issue is also affecting the price situation in India, added the source. The southern state of Tamilnadu is home for over 2000 spinning mills and has to depend on other states for its cotton supply. (Source: cottongrower.com)