India’s ending cotton stocks are estimated to drop to a three-year low this season to September on buoyant global demand and Centre’s export promotion policies.
Cotton production has also been pegged at a three-year low by the Committee on Cotton Production and Consumption (CCPC).
The lower closing stock and firm demand will likely keep cotton prices higher in the coming days.
In its cotton budget for 2021-22 (October-September), CCPC, earlier known as Cotton Advisory Board, has estimated closing stocks at 45.46 lakh bales (of 170 kg each), the lowest after 44.41 lakh bales in 2018-19.
CCPC, represented by all stakeholders in the cotton textiles industry starting from growers, has estimated cotton production at 340.62 lakh bales, also the lowest since 2018-19.
The estimates are in line with those of the Agriculture Ministry but below that of industry body Cotton Association of India (CAI) at 343.13 lakh bales. The closing stock estimates are also lower than the 48.13 lakh bales projected by CAI last month.
Closing stocks at the start of the current season were 71.84 lakh bales.
The CCPC pegged imports at 18 lakh bales and exports at 40 lakh bales, lower than last season. According to trade sources, 33 lakh bales of cotton have been exported until last weekend.
The overall supply of cotton has been projected at 430.46 lakh bales against consumption of 345 lakh bales.
Carryover concern
The top 63 industry representatives from the entire textile value chain including the top three Indian agencies — Cotton Corporation of India, CAI and Confederation of Indian Textile Industry — attended the meeting on Tuesday.
Industry sources said the drop in carryover stocks was a concern, though they said a more scientific collection of data using the latest technology was the need of the hour.
The Cotton Corporation of India, which operates the minimum support price programme on behalf of the Centre, has not made any procurement this season as prices have consistently been higher given the short supply in the market, sources said.
The government had fixed the MSP for the medium staple cotton at ₹5,726 a quintal for this season against ₹5,255 last season, while for long staple cotton it is ₹6,025 (₹5,550) a quintal.
Currently, cotton prices are hovering above ₹8,000 a quintal.
Robust exports
The CCPC meeting, originally scheduled last month, was postponed as the latest crop data was unavailable.
After a tough last season, exports of cotton textile products such as made-ups, fabrics and yarns have already surpassed the government target of $12.50 billion to touch $14 billion in the first 11 months of this fiscal.
Shipments were boosted by the Government move to extend the RoSCTL (rebate on state, central taxes and levies) scheme for made-ups and garments for three years until March 31, 2024, and by covering the entire value chain of textile products under the RoDTEP (rebate on duties and taxes on exported products) scheme.
Both schemes reimburse duties and taxes, including embedded taxes incurred on export products, making them more competitive in international markets.