Next year’s Indian Cotton crop to remain at current level
Commodity Online | August 31 2016
UPDATED 08:58:58 IST

NCDEX Chana under long liquidation; Support seen at 4100

MCX Mentha Oil likely to move in a range of 978.4-1005.4

MCX Cotton under short covering; Support seen at 15870

MCX Aluminium may trade between 136-137.8 levels

NCDEX Jeera under short covering; Resistance seen at 13820

By Seshadri Ramkumar
Indian cotton crop for the next season beginning in October will remain at the same level as the current year.

Yesterday, Mumbai-based Cotton Association of India (CAI) released the first estimate for the next year’s cotton crop beginning on October 1st. For the 2016-17 (October to September) new season, India is estimated to produce 33.6 million bales (170 Kgs each).

CAI has estimated current year’s crop production to be 33.8 million bales, which tallies with the recent estimate by Indian government’s cotton advisory board.

However, there will be acreage reduction of about 10% next year, which will be offset by increase in productivity, according to CAI.

Interestingly, next year’s domestic consumption is expected to remain at same level of about 30.8 million bales. CAI estimates, imports next year will rise slightly and the total import is estimated to be about 2 million bales as against 1.5 million bales, this year.

Although, not provided by CAI, an analysis of the cotton supply and demand situation pegs India’s current year cotton exports at 6.8 million bales. This will leave an opening balance of 4.4 million bales for the new season beginning, this October.

This morning’s interesting telephone conversation with an experienced cotton analyst from India revealed that India might import more than what is reported if China reverts back to improving its inventory during next season or if the weather situation is not favorable. With China starting to import, if India has to maintain its current export level or enhance it, certainly its stocks will be lowered. These situations may lead to a tight supply situation during the second half of the new cotton season, according to the analyst.

According to a media report, Nagpur based, India’s premier cotton research institute, CICR has estimated that next year’s crop will be only about 30 million bales due to fly infestation, monsoon pitfalls and production shifts to other crops such as pulses and oil seeds.