Lower production, higher return led to 11% fall in cotton arrival for 2015-16

The arrival of cotton during the ongoing 2015-16 season is not matching up with the arrival figures of last year. This reduction in the arrivals is an indication of a lower crop, said Dhiren Sheth, president of CAI. Lower production, higher return expectations by farmers have led to a fall in cotton arrivals by 11% in the ongoing season for 2015-16.

The industry feels that since the farmers were expecting higher returns for their produce, they had restricted arrivals during the season. The ones with a holding capacity are still expecting the price to go up further.

Between October 2015 and February 2016, arrival of cotton was 24.50 million bales against 27.62 million bales in the same period last year, latest data from Cotton Association of India reveals. A bale is equal to 170 kg.

The Cotton association has also revised cotton production estimate to 34.5 million bales against a previous estimate of 35.50 million bales.

Anand Popat, managing director of Jalaram Cotton and Proteins Limited from Gujarat said that since past few years, it has been seen that farmers are not willing to sell their cotton at lower prices, which, in turn, affects arrivals, though they expect that supply will increase after the Holi festival.

During March, cotton prices declined by Rs 500-700 to Rs 32,700-33,200 per candy of 355 kg because of fall in demand. Daily arrival has also declined from 125,000 lakh bales around the first week of March to 90,000 bales at the moment across India.

The projected balance sheet drawn by the CAI estimates the total cotton supply for 2015-16 at 43.26 million bales, while the domestic consumption is estimated at 30.40 million bales — leaving an available surplus of 12.86 million bales.