Cotton prices have seen sharp rise during the past couple of weeks. Prices in the benchmark Rajkot cash market has been trading around Rs. 21410/bales on June 01, 2018 which is around 7% higher than the prices a fortnight ago. The prices have breached the monthly average levels indicating high bullish sentiments in the market. The production may decline on account of expected lower acreage however the season has just begun and all eyes shall be focused on the planting progress. If production declines, the prices during the year may climb towards the levels of Rs. 23000 per bales reached during 2016. Export demand has been strong and also supporting the domestic prices.
Prices in domestic market have not been very favourable to farmers and in Rajkot last year prices traded in the rage of Rs. 20000-21000 per Bales during most part of the year and even declined towards Rs. 18000 per bales during December, 2017. There have been higher incidences of pink bollworm damages which have impacted the yield of quality cotton last year. Thus we are anticipating lower acreage during the current season for the crop in India as farmers may look towards alternate crops. Industry is expecting 10-12% lower acreage under the crop.
Planting of the crop for 2018-19 has already begun and latest government estimates shows decline in coverage under the crop. Total planted area stands at 9.958 lakh hectares as on May 31, 2018 against 12.184 lakh hectares during same time last year (a decline of 18.27%).
According to Cotton Association of India (CAI), cotton exports for 2017-18 are likely to reach 75 lakh bales, which is 30% higher year on year. 63 lakh bales of cotton have been already exported for the marketing year which began Oct 1, 2017. Global cues have been also positive for cotton prices as there is concern regarding weather in US.