The estimated crop size of cotton this year may come down owing to adverse climate in various parts of the country. The output might dip below 240 lakh bales against the October estimates of 270 lakh bales. 
 
The extra large staple (ELS) cotton production is badly hit, in particular. The ELS production is meagre compared with the demand from mills producing high count, super fine quality yarn such as 90S and 120S. Last year, the country produced 3 lakh bales of ELS and this year, we expect a 50 per cent decline,said Shankarlal Sharma, senior advisor to the Coimbatore Cotton Merchants Association. 
 
The shortfall in the supply is usually met through imports from Egypt and the US which is not possible now owing to fall in ELS cotton output in those nations, according to sources. 
 
Also, the cancellation of forward contracts by the Egyptian cotton shippers for Giza 70, 86 and Giza 88 varieties has worsened the matter. This has caused anxiety to the spinning mills in the Coimbatore region which have bought ELS cotton in the new season.  
 
After cancellation of the contract, the mills producing finer counts will have to face a tough time. Lot of domestic yarn contract has been cancelled because the mills are not getting either Egyptian cotton or any other alternative cotton to produce super fine quality yarn above 92S till 120S,?said Sharma. 
 
The steep increase in demand and the non availability of ELS cotton has pushed up the prices. The price of ELS shot up to 155 cents per pound against 105 cents per pound earlier. 
 
Even the home grown Suvin DCH 32 cotton is quoted at Rs 40,000 per candy compared with Rs 30,000 last year. The yarn rates of finer variety has increased by Rs 35 a kg from the end of last month.  
 
If this trend continues,it will affect the mills in and around coimbatore, because it is the center consuming right from cotton waste to Egyptian cotton. We plan to file a case with the Liverpool-based International Cotton Association (ICA), an international cotton traders association and arbitral authority, and wait for the results,?Sharma added. 

Business-standard.com