USDA projects strong year for Indian cotton
The last cotton season (2018-19) was not a good one for India. According to Cotton Association of India (CAI), cotton output had stood at 312 lakh bale, the lowest in the decade. The top slot, which India had been holding in the global cotton market for long, was also shaken up slightly. However, now, if things go right, India is expected to regain its number one position in global cotton cultivation, going by the latest United States Department of Agriculture (USDA) estimates. For the marketing year 2019-20, USDA has projected India’s cotton output to be 305 lakh bale (each 217.7 kg), which works out to 390 lakh India bale (each of 170 kg).
Indian farmers have already reportedly achieved a record cotton-sowing of over 125 lakh hectare and with sufficient rainfall, the country’s cotton crop seems to be good especially during September and mid-October. In fact, by some other estimates, this kharif season, India grew cotton on larger area at 127.67 lakh hectare, about 6 lakh hectare more than last year. And analysts are now hopeful that India may eventually experience an increase of more than 20 per cent in cotton crop during 2019-20, if there are no more damages to excess rainfall or diseases. Although, cotton trade bodies in the country are yet to come out with their own crop estimate while, the first advance estimate by Centre has projected cotton crop in the country at 322.7 lakh bales.
Meanwhile, the USDA international outlook on cotton crop, suggested, “Production in India is forecast at 30.5 million bales, 15 per cent above 2018-19, and the second highest on record, as both area and yield in 2019-20 are expected higher. Harvested area in India is projected at a record 12.9 million hectares in 2019-20, as domestic prices and internal support price prospects favour cotton over competing crops. The recent above-average monsoon rainfall will likely provide an extended picking season, which is expected to increase the yield to a 3year high.”
On the pricing front, cotton prices in the domestic market has been weak. The prices hovered at Rs 41,900 per candy (each of 356 kg) of ginned cotton with 29 mm variety, down from Rs 43,900 two months ago. International cotton prices quoted at 60.83 cents per pound on ICE futures for December 2019. Analysts think that cotton prices continued to reduce in August 2019, mainly due to a fall in international prices. The prices may fall further as global production is likely to be higher than the demand growth, analysts are of the view.
Interestingly, the MSP of cotton for the 2019-20 season is Rs 5,550 per quintal, against Rs 5,450 in the previous year.