Agri Business

CAI cuts cotton crop estimate for 2021-22 on lower yield, crop damages

BL Ahmedabad Bureau | Updated on: Jun 18, 2022
The latest crop estimate is about 12 per cent lower from its first estimate of 360.13 lakh bales 

The latest crop estimate is about 12 per cent lower from its first estimate of 360.13 lakh bales 

Seeks extension in window for duty-free import shipments till December 31, 2022

Ahmedabad, June 18 Lower yield, unseasonal rains during the initial months of harvest coupled with the reduced acreage has led the cotton trade body, Cotton Association of India (CAI) to reduce its crop estimate to 315.32 lakh bales (each of 170 kg) for the season 2021-22. The latest crop estimate is about 12 per cent lower from its first estimate of 360.13 lakh bales at the start of the season in October 2021.

Speaking to Businessline, Atul Ganatra, President, CAI said, "The unseasonal rains in October 2021 caused damages to the crop. The yield has taken a hit because of that. Also, the sowing was less therefore there is a reduction in the crop estimates."

States that are impacted

CAI's May estimate for cotton crop of 2021-22 showed maximum impact in Gujarat (-4.24 lakh bales), Maharashtra (-2.46 lakh bales) and Telangana (-2.5 lakh bales). Also, the Centre's third advance estimates released in May 2022 projected reduction in crop size to 315.43 lakh bales, 13 per cent lower than first estimate of 362.19 lakh bales.

Amidst reduced cotton output estimates and surging prices, the trade bodies have also requested the Centre for extension in the window for duty-free import of cotton from September 30, 2022 to December 31, 2022.

Imports

On imports, Ganatra stated that the import shipments have slowed down due to uncertainty on duty relaxations. The imports are likely to be at 15 lakh bales, of which about 7 lakh bales have already arrived at the Indian ports. CAI along with the Confederation of Indian Textile Industry (CITI) last week requested the Union Textiles Ministry for an extension in the shipment window for duty-free import of cotton.

The textile players have already cut down their production by about 20-30 per cent owing to the cotton shortage and unviable cotton prices in the domestic market. The reduction in crop estimates is not likely to impact the prices as the consumption has also taken a hit amidst already higher prices. The ginned cotton prices quoted at ₹1,00,000 per candy (356 kg) for 29 mm variety in the spot markets.

"The average monthly consumption which was about 29 lakh bales, has reduced to 22.5 lakh bales in June. And it is further on a decline. In our earlier estimates, we projected total cotton consumption at 350 lakh bales, which has now been reduced to 315 lakh bales," he said.

The trade expects the consumption to further fall to about 305 lakh bales in coming four months as the mills continue to face uncertainty on supplies, quality and price of the cotton.

As per CAI estimates, of the projected crop size of 315 lakh bales, about 288 lakh bales or 91 per cent crop has arrived in the markets so far. CAI expects the Tamil Nadu summer crop arrivals to begin from June, July and August.

Published on June 18, 2022
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