Cotton prices to remain around MSP till March, 2015

           The country’s cotton output in 2014-15 season is set to hit a record high for the second consecutive year.  In its first estimate, the cotton advisory board has estimated production at 400 lakh bales and also increased its estimate for last year’s crop to 398 lakh bales from 390 lakh bales as estimated in July, 2014. Due to drier weather in June and July, 2014 there was a large scale acreage shift from greengram, redgram and soyabean, which are normally sown during June-July to cotton, which can be sown as late as until August end. This has led to a rise in acreage under the fiber crop. Cotton acreage in kharif 2014-15 stands at 126.6 lakh hectares compared with 114.4 lakh hectares last year in the country.

For the third year in a row, world cotton production is expected to exceed consumption. Hence cotton stocks are set to reach new highs impacting prices. China,the world’s largest cotton producer, importer and consumer has been a critical factor in driving the world cotton market. In recent years, the Asian major consumer, built up huge reserves of cotton to meet its domestic needs. So China is unlikely to be an aggressive buyer this year and its imports could decline.

          In Andhra Pradesh (combined) the area under cotton in 2014-15 was around 24 lakh hectares against 22.69 lakh hectares in 2013-14. To help the farmers regarding the prices that are likely to prevail in the coming months, the Agricultural Market Intelligence Center (AMIC), of S.V Agricultural College, Tirupati has estimated the prices, taking the modal prices of Warangal market for 14 years using econometric models. Alongside, present market sentiments are also considered. The critical analysis of the same showed that the prices are likely to be around MSP till March, 2015. If the sentiments change thereafter, one can witness an upward trend in the prices.