Month: May 2015
INDIA Arrivals: (as on date: 12-05-2015)
Arrivals in the country were estimated at 32,000 bales as against 45,000 bales received last fortnight. Arrivals in north India were 650 bales Gujarat 15000, Maharashtra 3000, Madhya Pradesh Andhra Pradesh- Telangana 8000 and Karnataka 3000.
Early report by world Meteorological report and other international report model suggest below average monsoon for India in the year 2015. Indian meteorological department also suggests a weak monsoon due to early rain. Fresh updates will be issued after 15th may. The future too appears bleak for the rain-dependent sector as the meteorological department has predicted a below-normal monsoon. Agri Crisis on the horizon: Agriculture in India is going through one of its worst periods in recent times. On the one hand farm incomes have been dented by falling prices of crops—both of key crops like rice, wheat and cotton as well as cash crops like rubber, basmati rice, guar gum and potatoes. A drought-like situation in several states last year and unseasonal rains more recently have damaged crops in India.
For the period covering October 2014- March 2015, India exported 3.7 million bales (170 Kgs). But during the same timeframe in the last season (October 2013-March 2014), India had exported around 8.5 million bales. Comparing the two years, it is evident that there is a decline of about 50% in cotton export.
In addition to the China factor, the Indian cotton prices are not competitive enough in the international market, making Indian exports less attractive.While the export market is not presenting a pretty picture, the domestic market is picking up with cotton prices having an upward trend. After reaching a record area of 12.3 million hectares in 2014/15, area in India is forecast down 5% to 11.6 million hectares, and production down 3% to 6.4 million tons in 2015/16. Tight supply and limited stock position of cotton may increase the price of Indian cotton by 10%.
Cotton Corporation of India (CCI)
Stock sales by state-run Cotton Corporation of India (CCI) have crossed one million bales for the first time in two years, although arrivals of the fibre in the market have slowed down. The CCI sold 1.08 million bales of cotton until May 7 had procured 2.29 million bales. CCI is selling 70,000-75,000 bales of cotton on a daily basis, said the official. One bale equals 170 kg. since last few days cci has increased daily sales offer from 50000 bales to 0.1 million bales i.e. one lakh bales. CCI started offloading substantial stocks since April after the textile industry had complained to the textile ministry of an artificial shortage in the market created by the state-run procurement agency. Refuting the allegations, CCI CMD Mr. B.K Mishra had said the country was expecting a bumper harvest of 39 million bales in 2014-15, way above the requirements by textile mills, especially when export demand remained slow. Recently Mr. Mishra had said to date, the CCI has procured around 8.7 million bales of cotton from farmers just a little short from the record 8.9 million bales of purchases in 2008-09. CCI would factor in interests of small and marginal mills while undertaking sales.
As per the latest ICAC report, world area is projected to decrease 7% to 31.2 million hectares, and assuming a world average yield of 765 kg/ha, production is forecast down 9% at 23.9 million tons from 2014/15. China is expected to end 2014/15 with 12.4 million tons of stock, up 3% from last season, and stocks outside China are projected up 26% to 9.4 million tons, which is the highest level in 35 years. Excess stocks held outside China are likely to keep international cotton prices down in 2015/16. In 2015/16, consumption is expected to remain stable at 7.7 million tons as domestic yarn competes with imports. In the first three months of 2015, imports of cotton yarn into China increased 15% to 590,500 tons compared with the same
period in 2014. Much of these imports come from nearby countries such as India, Pakistan, Bangladesh and Vietnam. After a significant fall in 2014/15 to 7.5 million tons, world imports are expected to stage a partial recovery, increasing 3% to 7.7 million tons in 2015/16.
China: The Chinese government announced a cotton subsidy price of 19,100 yuan per ton for 2015, down from 19,800 yuan per ton in 2014. Accordingly, area in China is expected to contract 12% to 3.8 million hectares, and production could decrease by 16% to 5.4 million tons, ICAC said. China has slowed its purchase of cotton and yarn, to discourage its power and labour-intensive textile industry. A recent Edelweiss Financial Services report estimates China’s cotton import at a 5-year low of 1.6 million tons (mt) so far this season, against 3.08 mt the previous year. According to Joe Nicosia, the global platform head for cotton at Louis Dreyfus Commodities, estimates for cotton production in China for the coming year fall anywhere from 24 to 28 million bales.
Pakistan: Pakistan’s production is on track to reach over 2.3 million tons in 2014/15, around 100,000 tons under peak production of 2.4 million tons achieved in 2004/05. Pakistan’s average yield is expected to set a new record in 2014/15, and is projected up 14% to 810 kg/ha. However, in response to low prices, cotton area in Pakistan is forecast down 6% to 2.7 million tons, and production down 11% to 2 million tons in 2015/16.
Vietnam: According to the USDA, Vietnam’s cotton production in 2014-15 may fall short against the previous marketing year. Reportedly, Vietnam’s 2013-14 cotton production is estimated at 1,270 metric tons (mt.) or 5.82 thousand bales. The report also says Vietnam’s cotton consumption growth rate is expected to decelerate in the marketing year 2015-2016. The slowdown is likely to be triggered by China’s reduction of yarn imports on the back of incentives offered by the Chinese government to its spinners who purchase more cotton from Chinese reserves. Vietnam also imports cotton from India. In 2014, cotton imports from India were valued at $266.170 million, accounting for 18.5 per cent of $1.443 billion worth of cotton imported by the Southeast Asian nation.
AUSTRALIA: Early signs of El Nino also emerged on Australia’s east coast, with a poor end to the wet season in Queensland and a dry autumn in Victoria. Australia’s weather bureau has projected at least a 70 % chance of an El Nino emerging from July, said the weather pattern had already formed. The other countries bracing for an El Nino are China, Indonesia and Malaysia.
Mali: Despite Mali’s recent economic and political woes, the landlocked country is one of the leaders in cotton productivity across the world. Cotton, which employs more than 3 million farmers, remains the main cash crop in Mali, producing 450,000 tons in 2013 and placing Mali as the largest producer of cotton in Sub-Saharan Africa, and the 7th largest in the world.
U.S. In the United States, prices for some competing crops are likely to discourage farmers from planting cotton, and area is expected to fall 17% to 3.3 million hectares. Assuming an average yield of 912 kg/ha, production in the United States could reach 3 million tons in 2015/16.
USDA: The U.S. cotton 2015/16 projections include marginally higher supply and disappearance compared with 2014/15, resulting in ending stocks and prices on par with the preceding year. The increase in beginning stocks of nearly 2.0 million bales is mostly offset by an 11-percent decrease in production, due mainly to reduced planted area. Harvested acres and yields are based on historical averages by region, with adjustments to the Southwest to reflect favorable moisture conditions. Domestic mill use is projected higher while exports are at the prior year’s 10.7 million bales. The marketing year average price received by producers is projected to range from 50 to 70 cents per pound, with the midpoint of 60 cents, unchanged from the current season. World 2015/16 cotton projections show a decline in global stocks for the first time since 2009/10. As with the U.S. estimates, higher beginning stocks compared with last season are about offset by sharply lower world production, as most of the world’s cotton-producing countries respond to lower prices. World consumption is raised 3.5 percent due mainly to positive world economic growth and the lagged effect of falling cotton prices during 2014/15. World trade is reduced marginally, as a sharp drop of 1.7 million bales in China’s imports is mostly offset by increases in other countries. China’s lower production and imports, combined with a consumption increase of nearly 3 percent, are projected to reduce ending stocks by about 3.0 million bales, accounting for more than three-fourths of the decline in world stocks. Despite this reduction, world stocks of 106.3 million bales would still be the second highest on record. For 2014/15, U.S. production is raised marginally, based on lower harvested area and higher yields, reflecting the season final report. Slightly higher world ending stocks incorporate a number of current and historical data adjustments, resulting in increases for Argentina, China, and Benin, partially offset by decreases for India, Malaysia, and Brazil.
2015/16 World Area and Production Down
World area is projected to decrease 7% to 31.2 million hectares, and assuming a world average yield of 765 kg/ha, production is forecast down 9% at 23.9 million tons from 2014/15. After reaching a record area of 12.3 million hectares in 2014/15, area in India is forecast down 5% to 11.6 million hectares, and production down 3% to 6.4 million tons in 2015/16. The Chinese government announced a cotton subsidy price of 19,100 yuan per ton for 2015, down from 19,800 yuan per ton in 2014. Accordingly, area in China is expected to contract 12% to 3.8 million hectares, and production could decrease by 16% to 5.4 million tons. In the United States, prices for some competing crops are likely to discourage farmers from planting cotton, and area is expected to fall 17% to 3.3 million hectares. Assuming an average yield of 912 kg/ha, production in the United States could reach 3 million tons in 2015/16. Pakistan’s production is on track to reach over 2.3 million tons in 2014/15, around 100,000 tons under peak production of 2.4 million tons achieved in 2004/05. Pakistan’s average yield is expected to set a new record in 2014/15, and is projected up 14% to 810 kg/ha. However, in response to low prices, cotton area in Pakistan is forecast down 6% to 2.7 million tons, and production down 11% to 2 million tons in 2015/16.
In the last two seasons, sales from China’s national reserve were well underway in April with around 1.3 million tons sold at the end of April 2013 and 1.4 million tons at the end of April 2014. Although China announced last spring that it was ending its reserve policy, the Chinese government still holds over 11 million tons, and sales were initially anticipated to occur this spring. However, sales have not yet begun and the Chinese government has not announced an official date for sales to start this year. To bolster sales of cotton from the current season’s domestic crop and potentially sales from the reserve, the Chinese government limited import quota in 2015 to the volume required under WTO rules of 894,000 tons. Although domestic prices have fallen, they are still relatively high compared to international prices and to polyester prices. China is expected to end 2014/15 with 12.4 million tons of stock, up 3% from last season, and stocks outside China are projected up 26% to 9.4 million tons, which is the highest level in 35 years. Excess stocks held outside China are likely to keep international cotton prices down in 2015/16. World consumption is forecast up 2% to 24.1 million tons in 2014/15. Just before the start of 2014/15, cotton prices fell quickly while polyester remained flat. However, in the following months, polyester prices have also dropped, diminishing the likelihood that cotton will regain market share from polyester. Cotton consumption is likely to grow modestly next season, driven by increases in population and moderate economic growth. In 2015/16, world consumption is projected up 2% to 24.5 million tons as spinning shifts from China to the rest of Asia. Low domestic cotton prices may enable cotton consumption in China to rise 2% to 7.7 million tons in 2014/15 after falling for four consecutive seasons. In 2015/16, consumption is expected to remain stable at 7.7 million tons as domestic yarn competes with imports. In the first three months of 2015, imports of cotton yarn into China increased 15% to 590,500 tons compared with the same period in 2014. Much of these imports come from nearby countries such as India, Pakistan, Bangladesh and Vietnam.
After a significant fall in 2014/15 to 7.5 million tons, world imports are expected to stage a partial recovery, increasing 3% to 7.7 million tons in 2015/16.
Better Cotton Initiative (BCI):
The annual report of Better Cotton Initiative (BCI) says Better Cotton now makes up
5% of the national cotton production in India. The 5th Better Cotton harvest in India
saw 84 % increase in numbers of smallholder farmers, spread across 10 different
India Cotton Association Limited
Indian Cotton Association Limited (ICAL) president Mahesh Sharda said cotton was
a major cash crop cultivated on around 127 lakh hectares by more than 60 lakh
farmers in India.
To help cotton growers, ICAL is planning to adopt some cotton growing villages in
association with technical expertise of Monsanto India Limited where both partners
will help cotton growers from sowing till harvesting to guide them on better
management practices in cotton cultivation and enhance their productivity during
the upcoming Kharif 2015 sowing season through a series of on field activities
The ICAL will constitute a team of dedicated people representing both the partner
organisations, survey representative village and launch the farmers’ awareness
programme on productivity enhancement, well before sowing at adopted villages.
Cotton Association of India (CAI):
CAI Estimates Cotton Output For 2014-15 At 391 Lakh Bales
- Cotton Association Of India’s (CAI) March Month Estimate Of Crop OutputStood At 391 Lakh Bales For 2014-15 Season Compared To 396 LaKh Bales Estimate In February Month
- Main Reason For Reduction In The CAI’s Crop Estimate By 5 Lakh Bales Than Compared With That Released During The Last Month Is Untimely Rain In The Central Zone.
- Total Crop In The Central Region In March Is Estimated At 214.25 Lakh Bales Compared To 235.75 Lakh Bales Last Year
- CAI Estimates 2014-15 Total Cotton Supply At 46 million bales Bales, While Domestic Consumption Is Estimated At 31 million Bales, Leaving An Available Surplus Of 15 million Bales
- CAI Estimated Cotton Arrival Reached At 318.45 Lakh Bales As On 31 March
Textile sector has been identified among one of the 25 sector covering under “Make in India” drive. India homes to world’s 24% spindles, 8% rotors and it is second largest manufactures of cotton and silk. Besides this, India enjoys comparative advantage of skilled manpower and cost of production over other countries preferred destination for investment. Govt. allowed 100% FDI in textile under automatic route subject to all applicable regularity rules. Already several foreign companies invested in India in value chain added sector like Zara and Mango from Spain, Benetton, Levi’s etc and reputed machinery manufacturers. Govt. also extended the applicability of anti dumping duties on poly amide 6,6 to reduce the effect of China in this sector. Apparel sector of India achieved the growth of 18% from April 14 to Sept 14 against 15.7 % in year 2013-14. Technical textile sector also witnessed fast growth. In conventional area, top companies performed well and expanded their business. For eg -Trident Ltd ( US $ 1 Billion business) has inaugurated the world’s largest terry towel plant and has laid down the foundation stone for composite Mills in Budhni with an investment of INR 24 billion.
Centre raises MSP of cotton by Rs. 50 per quintal
Taking note of the distress to cotton growers due to fall in cotton prices, the Government announced a hike of INR 50 per quintal each in the minimum support price of medium and long staple cotton for 2014-15. The MSP (per quintal) for cotton was fixed at Rs. 3750 for medium staple and Rs. 4050 for long staple 2014-15. The government has lowered the estimates of cotton production for the 2014-15 season to 390 lakh bales from 400 lakh bales due to untimely rains and hail storms across the country, as reported by Union Textile Minister Mr. Santosh Kumar Gangwar.
In order to share the vision of the thought leaders, COTTONGURUTM is interviewing India’s top 10 mills, top 10 Ginners and relevant leaders of the textile industry to get their ideas and views.