Ahmedabad, September 5 India’s cotton output for the season 2022-23 is likely to touch 375 lakh bales (each of 170 kg), given no climatic adversities affect the crop during October, trade sources said.

This higher crop is expected to bring down the prices from record high levels of nearly ₹1 lakh per candy (each of 356 kg) in May-June 2022. Thanks to about eight per cent rise in acreage, a seemingly good crop coupled with a demand slowdown in the cotton value-chain — yarn and garments — may cause supply pressure thereby triggering a downward price trend by end of this year.

Cotton area is estimated at 126 lakh hectares till September 2 — up 8-9 per cent from 117 lakh hectares last year.

Atul Ganatra, President, Cotton Association of India (CAI), stated that the cotton crop condition in India was "very good and if everything goes well, we are expecting 350 lakh bales +/– 25 lakh bales." The crop size may touch 375 lakh bales if there are no rains during October. If it rains during October, when the cotton bolls are open in the irrigated fields, it may hamper the quality.

“This season our cotton production is down from 355 lakh bales to 315 lakh bales, as yield is reduced drastically due to many reasons. To increase our yield, we have to adopt new seed technology as our current seed has lost its resistance against pests,” Ganatra said addressing the 62nd AGM of All India Cotton Seed Crushers’ Association.

Higher supply

Ashwani Jhamb, Vice-President of Indian Cotton Association, noted that India’s cotton crop for 2022-23 may be higher by about 50 lakh bales from the previous year. Additionally, Jhamb stated, “We believe that the prices will go down as the arrivals pick up. The yarn market is in a bad situation as exports are not happening due to higher prices and economic weakness in the other countries. Only domestic demand can’t hold the market.”

Domestic prices of the fibre crop had moved up from ₹70,300 a candy (each of 356 kg of ginned cotton) in January to ₹98,000 in July. However, the prices softened since then to touch ₹91,500 on August 3, before rising again to ₹93,000 a candy on September 3.

Rajkot-based cotton trader Anand Popat also suggested a dip in cotton prices following the mounting supply pressure. "There is a global economic weakness and retail demand for garment is taking a hit. We don't see yarn demand taking off at this rates. No spinning mill is operating at its full capacity at present. India's total cotton consumption has reduced by half from last year. If only there is reduction in prices, we will see some mill demand," said Popat adding that the ground factors such as good crop condition would not be supportive of a further price rise irrespective of the global crop situation.

Ganatra added that over 1,500 small spinning mills have completely closed operations, while most of the medium and large mills have cut production by 50-70 per cent. This is impacting the monthly cotton consumption.

Global output down

The international agencies have estimated a dip in the global cotton output and hinted at higher prices during 2022-23. The International Cotton Advisory Committee (ICAC), in its recent monthly report, expressed concern over recent floods in Pakistan reducing cotton output by 0.5 million tonnes to 1 million tonnes for the country. For the United States, too, ICAC has estimated a lower crop situation in Texas with an estimated loss of over 1 million tonnes compared with the previous season. "This puts the current US crop at just over 2.7 million tonnes," it said with a price projection of 126.95 cents per pound as midpoint.

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