Carry forward stock may rise if cotton exports not allowed

AHMEDABAD: India can see higher carry forward stock for cotton this season if demand remains subdued and the Centre does not release further export quota, saytrade sources. As per the Cotton Advisory Board (CAB)’s February estimates, the country could see 40 lakh bales (one bale is 170 kg) of opening stock for new season (2011-12). However, sharp correction in cotton as well as yarn prices has impacted the demand which can lead to higher carry forward stock.

“At present, demand is very low. If this trend continues for a few more weeks then we will see more stocks on hand than last year,” said Akash Chapdiya, MD of Fem Cotton, a Rajkot-based exporter. “Farmers are holding significant stocks with them which will be sold in the market when new sowing begin. Expectations of timely monsoon will see sowing beginning in next fortnight ,” he added. Big farmers could not sell their stocks during the February-March period when prices were ruling at Rs 60-62k per candy (1 candy is 356 kg), an all-time high levels. “Farmers became greedy and are now regretting the lost opportunity,” added Chapdiya. They will be ready to offload their stocks if prices see even a 10% bounce from the current level even, he believes.

Last year we saw a carry forward of 35 lakh bales due to higher export dispatches. To retain domestic availability, government put ban on the cotton export in April, 2010 and lifted it on October 1 after releasing 55 lakh bales quota.

As per the Cotton Corporation of India (CCI) data, 294 lakh bales have already arrived in the market out of estimated crop of 312 lakh bales. Of these, 45 lakhs bales remainede unsold with CCI, exporters, ginners and merchants. CCI has bought total 13.75 lakh bales during current season.