The latest cotton crop estimate put out by the Cotton Advisory Board (CAB) has perplexed the industry, as it is in sharp variance with the forecast of other bodies.

The CAB has put the provisional crop size at 337 lakh bales (of 170 kg each) for the 2018-19 season, which is 22 lakh and 61 lakh higher than the estimates of the Cotton Association of India (CAI) and the Union Agriculture Ministry, respectively.

Industry insiders claimed that the distortion in the crop numbers is confusing the market and influencing the prices contradictory to the ground reality. In its Third Advance Estimates for cotton crop for 2018-19 released earlier this month, the Ministry projected total cotton crop at 275.93 lakh bales (lb), way below last year’s output of 365 lb. The CAI’s estimate stands at 315 lb.

In its recent meeting held on Tuesday, the CAB pegged the crop size for 2018-19 at 337 lb. However, so far the cumulative cotton arrivals for the season across the country is reported at about 302 lb.

Drop in arrivals

Considering the CAB’s crop estimates, there appears to be an additional 35 lb still lying with the farmers and yet to be brought to the markets.

A source in the trade said, “The fact is that the Agriculture Ministry has admitted the crop to be very small. The arrivals have dropped to hardly 3,500 bales per day, which means we will see roughly one lakh bales of arrivals each month for the next 4-5 months. CAB’s crop estimate will mean more cotton will come to market than what we see. The government’s own figures are misguiding the market.”

CAB had held its second meeting for cotton season 2018-19 on June 18 under the Chairmanship of Textile Commissioner and representatives from Central and State governments, textile industry, cotton trade and ginning and pressing sector. In its first meeting held in November last year, CAB had projected a 361-lb crop.

Downward revisions

However, due to drought conditions and adverse climate, cotton production in the country was revised downwards.

Cotton output in the largest grower Gujarat is revised downwards to 55.39 lb. The crop size is lowered in other major growing States, too, including Maharashtra (71.28 lb), Telangana (40.95 lb), Andhra Pradesh (14.29 lb), Karnataka (13.40 lb), Punjab (12.23 lb ), Haryana (20.13 lb) and Rajasthan (20.27 lb).

Raw cotton prices have crossed ₹6,200 a quintal marke at several spot markets in Gujarat, while ginned cotton prices hovered around ₹44,800 a candy (of 356 kg each).

“At such high prices, it is illogical to believe that farmers will continue to hold the stock. As the season approaches the close, we may see further surge in prices unless imports rise more than expected,” said a Gujarat-based cotton trader.

The CAB has estimated cotton imports to be around 22 lb, up from 15.8 lb last year. Exports, however, are estimated to drop to about 50 lb against 67.59 lb reported last year.

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