“Cotton sowing is down to 7.61 million hectares from 10.50 million a year ago, but the situation can improve rapidly. “There is good progress of planting over last week and we should be able to cover 11.5 million hectare, similar to previous year,” said Dhiren Sheth, president of the Cotton Association of India.****__”
Cotton sowing is picking up on monsoon revival but the price realization might be very poor this year.
aThe time for crops like soybeans and peanuts has passed so farmers will look at cotton as the last resort,a said Prerana Desai, research head at Kotak Commodity Services Ltd. in Mumbai. aPlanting can catch up and weall definitely end up seeing higher acreage. Whether weall have another record crop or not we have to wait and see.a
(Cotton) Futures have dropped for 11 straight weeks in New York, capping the longest slump in 55 years, on concern that global inventories are climbing as demand slows from China, the largest user. A higher crop in India, the top shipper after the U.S., may curb any rally in prices that fell 20 percent in 2014.
In their recent report, Motial has painted very gloomy forecast for corn too.
…Our channel checks suggest that delay in rainfall and significant fall in corn prices globally and in India has driven farmers to shift from corn to cotton, which could result in 5-6% decline in corn acreages for the current Kharif season.
The prospect of a colossal 1bn-tonne global corn crop has sent the price of the grain below $4 per bushel for the first time in almost four years.
We need to see the implications of this finding from CRISIL. I am also trying to get this CRISIL report…This might have a temporary impact on Kaveri Seeds…
Valueresearch online has come out a report stating KSCL as a “future proof stock to build wealth”
Also HSBC initiates coverage of Indian agricultural sector with “overweight” ratings for seed supplier Kaveri Seed Company and agrochemical firm PI Industries Ltd citing their “growth profiles, favourable sector trends and attractive valuations.” Projections for India’s food demand could see agricultural yields improving by 1.7 percent annually, making companies in this segment “stronger gainers in coming years.”[Report not available publicly.]
I believe the change in policy is more with trial of eatable agri product and also for future approval. BT Cotton is approved as early in 1998 and very much established in the market. What it would impact is new brijal/Corn and other GM seeds which I do not know whether Kaveri is developing or not and delay in sales from those seeds which adversely affect cashflow and valuation if Kaveri expected to launch those products. However, my limited understanding is they are looking more at hybrid seeds for future growth as against GM seeds. Other members are free to comment in case my understanding is wrong.
Farmers have planted cotton on 152% of the normal area as on August 6 in Andhra Pradesh and the overall cotton acreage in the state is expected to be higher than the last two years. “Farmers are still planting cotton with the progress of rainfall,” said an official of the Andhra Pradesh agriculture department.
This may be significant to Kaveri as they sold 42L last year in AP.
I am from hyderabad and there is hardly any rainfall yet, I dont think rains are good this season. but farmers might have bought seeds and sow them in hopes. Not sure how much rainfall cotton requires
Sorry. Got the results. Sales growth seems tepid. The PBILDT margins have improved to 28% in Q1FY15 from 22.35% in Q1FY14 which has resulted into increase in PAT. It would be interesting to listen to the con-call for understanding the reason for low growth (there might be some spillage of sales to Q2).
Trailing EPS becomes 40 now and company is available at trailing 20 pe. If there are some slippages to the next quarter, then the valuations will start looking interesting.
I feel that Q2FY15 should be better than Q2 FY14 because of delayed monsoons. Some farmers buy seeds just a day before sowing. Also, in some cases farmers had to sow another set because after initial rains in June, the monsoons were subdued and picked up in July second week or so.
Cost of materials consumed is much higher, 150cr vs 59cr last year. But changes in inventories is lower at 138cr vs 210cr. It would be interesting to see how many packets of seeds were sold. I was hoping for a higher increase in sales because of increase in acreage.
