Based on the healthy market arrival trend of cotton so far, the Cotton Association of India has maintained the crop size for the 2017-18 season at 375 lakh bales (of 170 kg each) in its latest estimates. This is despite the fact that reports of pest infestation mainly the pink bollworm affecting the crop in Gujarat, Maharashtra, Telangana and Karnataka among others. However, CAI expects a decline in targeted exports of the fibre crop at around 55 lakh bales, down from earlier projection of 63 lakh bales on the recent firming trend in cotton prices.
“Since cotton rates have gone up in India by 10 per cent in the last one month, the earlier set target of cotton export of 63 lakh bales looks difficult now, hence cotton export figures have been reduced and revised from the earlier 63 lakh bales to 55 lakh bales,” Atul S Ganatra, President, CAI, said.
Further, as the cotton prices have moved up in the country, the parity to import the fibre crop has increased. As a result, the trade body sees an increase in imports and has revised the import figures from 17 lakh bales to 20 lakh bales this season. Market arrivals of cotton in the first three months of the 2017-18 marketing season starting October are higher by around 43 per cent over corresponding last year.
Arrivals would have crossed 148 lakh bales by December 31 this year as against 108 lakh bales, based on the data gathered from each State. The higher arrivals are despite the fact that major growing States including Maharashtra and Telangana reporting pink bollworm infestation. CAI has announced cotton crop size of 375 lakh bales which looks achievable given the pace of arrivals this season, Ganatra said. CAI’s estimate is marginally lower than the Cotton Advisory Board’s recent estimate of 377 lakh bales for the 2017-18 season.
Relief for spinners
Meanwhile, ICRA in a recent report said that domestic spinners were likely to witness a gradual recovery in performance from Q4 FY2018 onwards, after facing multiple headwinds over past several quarters which resulted in their profitability touching six-year lows in the second and third quarters of current fiscal. “The improvement in performance of domestic spinners is likely to be aided by a downward bias in cotton prices amid healthy cotton crop and an upward bias in yarn realisations due to demand restoration. While there has been an uptick in cotton prices in the recent weeks, ICRA believes the same to be an aberration in light of slower-than-usual arrivals in the leading cotton producing state of Gujarat owing to elections and concerns emanating from reports of pest attacks,” said Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA.ICRA believes that the crop quantity and quality is unlikely to be impacted considerably because of the aforesaid concerns and the arrivals are likely to pick up in Q4 FY2018.