Indian Government is completely lacking any plan or policy when it comes to Agri products. Lack of policy frame work has resulted total perplexity in cotton industry. The government in a hasty and probably a awful decision banned the Cotton exports when it was repeatedly forecasted that the Cotton crop will be bumper this year and considering the consumption pattern in India, the production and carryover stocks will be enough to match the demand and earn Forex through exports. The new crop estimate for 2012-13 season will pave way for new triggers in the markets. China is yet to release its import quota. Countries like India, Brazil and Australia are eyeing for a handsome share if China starts to increase its Cotton stocks.
After the calls of opening up of exports spot prices for Cotton has remained elevated on a average basis. Indian 28 mm variety has seen a sharp recovery from Rs 21529 per candy to Rs 34778 per candy (1 candy= 170 kg) from a levels of Rs 39700 in November. Kapas futures for May 2013 expiry is at one year high at the moment. The benchmark prices reached a high of Rs 1110 in May, a level not seen since April 2011. The current short bull pattern remains intact and is anticipated to fizzle out once the prices level off to Rs 1214 per 20 kg levels.
The benchmark Kapas futures for May 2013 expiry on NCDEX went on to test Rs 1110 levels, which is its one year high. Lower government interference from now on can result in some appreciation of Kapas prices and moreover it will now be fundamental based market with prices taking their own route. Demand-Supply picture is likely to overtake Cotton once the initial euphoria of revocation of ban is over. The latest estimates of Cotton Advisory Board (CAB) expects total cotton production in the country to reach 34.7 million bales (1 bale = 170 kgs) for the Oct-Sep season of 2011-12. Indian Cotton production was earlier estimated at 34.5 million bales in January. The production is up by 2.3% from the 33.9 million bales of produce in 2010-11 season. The total acreage of Cotton is expected to improve by 9.4% to 121.91 lakh hectares in 2011-12 as against 111.42 lakh hectares in 2010-11.
Indian Meteorological Department has predicted a normal monsoon with long period average to range between 96-104%. The IMD has also predicted that there is a probability of 24% below average rainfall as well. Meanwhile, Japanese Regional Institute for Global Change (RIGC) is predicting a below normal monsoon for India especially in the west coast that covers Gujarat and Maharashtra. The Cotton sowing during monsoon is at its peak and July to September is crucial months for sowing of Cotton. Any decline in average monsoon can impact the crop pattern.
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