Commodity Outlook – Cotton

Sowing period: June to July
Harvesting period: October to May
Crop season: Kharif

Key growing regions:

  1. Gujarat – Botad, Mehsana, Patan, Rajkot, Surendranagar, Amreli, Junagarh
  2. Maharashtra – Chandrapur, Nagpur, Wardha, Buldhana, Yavatmal
  3. Telangana – Adilabad, Karimnagar, Khammam, Nalgonda, Warangal
  4. Madhya Pradesh – Badwani, Chhindwara, Khandwa, Khargone, Dhar
  5. Punjab – Bhatinda, Fazilka, Mansa, Muktsar, Faridkot

Production trend and Stock position:

  • As per the Ministry of Agriculture third advance estimate released on May 25, 2021, Cotton production for FY 2020-21 was 364.92 lakh bales (lb) compared to FY 2019-20 which was 360.65 lb, up by 1.18 percent
  • According to Ministry of Agriculture, the sowing acreage of Cotton as on July 23, 2021 was 108.93 lakh hectares (lh) down by 7.71 percent compared to 118.03 lh during the corresponding period
  • According to government of Gujarat, the progressive area of Cotton as on July 19, 2021 was 20.91 lakh hectares (lh) up by 2.86 percent compared to 20.33 lh during the corresponding period
  • Cotton Association of India (CAI) has urged the government to withdraw the 10 percent import duty on cotton
  • In US Department of Agriculture (USDA) June 2021 forecast report for 2020-21 season’s global production and consumption has been raised marginally from the month of May month
  • USDA has increased the cotton crop estimate by 5 percent for the coming 2021-22 season forecasted at 118.9 million bales in comparison to the previous year’s production
  • India to sign MoU with Bangladesh to export 10 lakh bales of cotton annually

Monsoon Update

For the country as a whole, cumulative rainfall during this year’s monsoon season till July 21, 2021 is below Long Period Average (LPA) by 5 percent. Details of the rainfall distribution over the four broad geographical regions of India are given below:

Market commentary: Price outlook

  • The Government had increased the Minimum Support Price (MSP) of Cotton Medium Staple by 3.83 percent to ₹ 5,726 per quintal for marketing year (MY) 2021-22 compared to ₹ 5,515 in 2020-21 whereas for Cotton Long Stable had also increased by 3.43 percent to ₹ 6.025 per quintal for marketing year (MY) 2021-22 compared to ₹ 5,825 per quintal in 2020-21
  • Cotton prices are likely to be bullish in immediate / short term amidst good domestic demand and limited supplies
  • Currently, mandi arrivals have been less as compared to the existing demand, therefore the millers have turned to Cotton Corporation of India (CCI) and the Federation for securing cotton
  • Cotton prices have increased also due to hike in selling price by CCI who holds majority of cotton in the country apart the improving demand from the mills and MNCs, as per various media sources
  • Due to all of the above mentioned factors, Cotton prices are unlikely to turn bearish in the spot market

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