Commodities

CAI sees higher cotton carryover stock at 113 lakh bales

Ahmedabad | Updated on January 07, 2021

Analysts, however, see prices remaining firm on strong demand

Even as cotton consumption is expected to return to pre-Covid levels during the ongoing season (October to September), the closing stock is likely to be one of the record in recent years at 113.5 lakh bales (of 170 kg each). This will be higher by about six lakh bales from the closing stock of last year.

The higher inventory is partially attributed to reduced estimated exports, but largely it is due to the carryover burden from the previous year, i.e. 107.5 lakh bales.

“Domestic consumption has now been estimated by the CAI at 330 lakh bales. The consumption for the previous season was estimated at 250 lakh bales due to the disruptions caused on account of Covid-19 pandemic. The cotton consumption is now expected to reach the pre-lockdown level during the 2020-21 season,” Atul Ganatra, President, Cotton Association of India (CAI), said. In its monthly crop estimate for December 2020, CAI has revised its crop estimates marginally upwards to 358.50 lakh bales from its previous estimate of 356 lakh bales. The price for benchmark cotton, GUJICS-105 29 mm, quoted at ₹43,200 per candy (of 356 kg). The prices have gained by nearly ₹2,500 in the past one month. Analysts see cotton prices to remain firm during the year on multiple factors.

“In domestic market there is a revival in the retail demand, which will fuel the prices. Additionally, our cotton is competitive in the international market so exports are good,” said Ajay Kedia, Director, Kedia Commodity.

Also, an upside in crude oils would make polyester and man-made yarn costlier. Crude oil is hovering above $50 a barrel.

Trader sources revealed that spot prices firmed up by ₹1,000/candy within past one week owing to reports of cold wave in North India and unseasonal rains in growing regions including South India, Rajasthan and Gujarat.

Published on January 07, 2021

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