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FACE2FACE | September 2018

Cotton prices to stay firm: CAI chief

Cotton has been in news time and again with its ups and downs. Recently, the prices in India have been going up, and cotton imports are said to be on the rise. Cotton Association of India (CAI) is a crucial player and Atulbhai S Ganatra, President of CAI, spoke to the Editor of ITJ in an exclusive interview on some important issues.

Cotton price has been going up. What are its effects on consumption and export of cotton products?
  • Cotton price in India has gone up and currently it is around Rs 49,000 spot for 29 mm per candy. This will not have much effect on domestic consumption of cotton because at this rate also, mills are earning little money. During the last 10 months, spinning mills have made good profit and therefore, I feel that whatever may be the rate of cotton, mills won’t stop buying cotton.
  • At current price level, Indian cotton is the cheapest cotton available in the world and therefore, there will be enquiries for exports at this rate will continue. We expect that India will export 70-75 lakh bales during the ongoing cotton season, i.e. from October 1, 2017 to September 30, 2018 (2017-2018).

  • Cotton import is on the rise. What are the trends in consumption by domestic mills? What does the changing pattern in demand-supply foretell?
    Last year, India’s cotton import was around 27 lakh bales. This year, we are expecting around 12 lakh to 15 lakh bales which is about half of the quantity imported in last year. The reason for lesser import of cotton is because of lower domestic prices. During the last nine months Indian cotton was about 15 per cent cheaper in the world. So mills were not importing cotton and now, not much cotton is left in the world market for nearest supply. Further cost of importing cotton is also higher around Rs 53,000 spot per candy.

    Cotton sowing has begun -- What was the effect of cotton supply in 2017-18? What are the expectations and fears on cotton front in 2019?
    As per the latest report of the Cotton Advisory Board, acreage under cotton in India in last year was around 124 lakh hectare. However, till July 26, 2018 this year cotton sowing was only 102 lakh hectare which means that we are lagging behind by about 20 per cent in cotton sowing this year compared to last year.

    By this time cotton sowing is almost over and therefore, in our view the acreage under cotton this year will reach around 110 lakh hectare which will be approximately 10 per cent lower than last year. This year, farmers in Maharashtra have turned to soybean cultivation from cotton cultivation.

    Supply of cotton is going to be affected badly due to very less carry-forward cotton stock at the year end on September 30, 2018. The closing stock will be around 20 lakh bales only. In start of new season not only carry-forward stock will be very less but arrivals of new crop will also be delayed by about 20 to 30 days due to late sowing.

    Due to late sowing, pink bollworm problem is going to aggravate if proper water is not available for cotton crops during the months of October and November. Since China has put 25 per cent duty on import of cotton from the US, Chinese mills will turn to India for buying cotton in bulk from the month of October itself which may create problem for Indian mills to cover cotton in time. Seeing all these conditions and factors, cotton prices in coming months is likely to see firm trend.

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