Market Monitor | November 2014
Cotton fall triggers off big MSP operation
The Cotton Association of India (CAI) has placed the cotton crop for the season 2014-15 beginning on 1st October 2014 at 405.50 lakh bales of 170 kg. each. The projected Balance Sheet drawn by the CAI for 2014-15 estimated total cotton supply at 477.40 lakh bales while domestic consumption is estimated at 306.00 lakh bales, thus leaving an available surplus of 171.40 lakh bales. A statement containing the state-wise estimates of the crop and Balance Sheet for the season 2014-15 with the corresponding data for the previous year is shown in the Table above.
India is heading towards a big minimum support price (MSP) operation this season and the Cotton Corporation of India (CCI) has a huge responsibility on its shoulders. In this situation, all stakeholders should lend support to CCI in discharge of its onerous responsibility. This support will facilitate farmers receiving the necessary price and the orderly marketing of cotton procured by CCI which is in the long term interest of the entire cotton value chain, says Dhiren N Sheth, President of CAI.
Meanwhile, Union Agriculture Minister Radha Mohan Singh has convened a meeting with Commerce Minister Nirmala Sitharaman and Textiles Minister Santosh Gangwar to discuss ways to help cotton growers following the crash in cotton prices from a record crop this year.
Domestic cotton prices have fallen due to sluggish export demand and anticipated higher domestic production. The Cotton Advisory Board has pegged the country's total cotton production at over 40 million bales in the 2014-15 crop year, as against 39.8 million bales in 2013-14.
The drop in demand is expected to coincide with bumper crops in key producers, including the United States and India, after farmers upped their plantings this year. The USDA reduced its projections for domestic use in China, the world's top textile market, to 37.5 million bales, down by 500,000 bales from last month's forecast, which was entirely offset by a lowered outlook for China's production.