Care Rating’s Cotton and Cotton Yarn update for January 2021

Cotton production
During the cotton season (CS) October 2020-September
2021, the output is expected to decline by a marginal 0.4
per cent y-o-y to 6.1 million tonnes. This will be supported
by an expected better acreage and yields on account of
adequate rains. In addition to this, higher cotton Minimum
Support Price (MSP) by 4.9 per cent to Rs 5,515 per quintal
and 5 per cent to Rs 5,825 per quintal for medium staple
cotton and long staple cotton, respectively, for CS 2020-21
is also expected to aid cotton production. This was above
the MSP hike of 26-28 per cent undertaken in CS 2018-19 to
support farmer’s income. The MSP was increased by 1.8-2
per cent during CS 2019-20.

Even while cotton production is estimated to remain
almost stable, a surge in opening stock in CS 2020-21 is
expected to increase total cotton supply by 22.1 per cent to
8.5 million tonnes during the year. The domestic cotton
demand is likely to grow at a faster pace of 32 per cent to
5.6 million tonnes as consumption in the domestic market
is estimated to reach at normal levels in the current cotton
season. Despite this, the available cotton surplus will stand
at 2.9 million tonnes (6.3 per cent increase y-o-y) and when
estimated exports of 0.9 million tonnes are factored in,
closing stock for the ongoing season is expected to stand
at 1.9 million tonnes which is around 32 per cent of the
estimated production during CS 2020-21.

CATEGORIES Automation