COT­TON OUT­PUT MAY HIT 9-YR LOW

Financial Chronicle - - FRONT PAGE - RA­JEN­DRA JAD­HAV

In­dia’s an­nual cot­ton out­put could drop 12% to the low­est in 9 years as lim­ited rain­fall in the top two pro­duc­ing states has slashed crop yields.

In­dia’s an­nual cot­ton out­put could drop 12 per cent to the low­est in nine years as lim­ited rain­fall in the top two pro­duc­ing states has slashed crop yields, po­ten­tially cut­ting ex­ports from the world’s top pro­ducer, in­dus­try of­fi­cials said.

Lower cot­ton ship­ments from In­dia will al­low ri­vals such as the United States, Brazil and Aus­tralia to in­crease car­goes to key Asian buy­ers such as China and Pak­istan. It may also sup­port global prices that have fallen 16 per cent since hit­ting a four-year peak in June.

In­dia could pro­duce 32.5 mil­lion bales in the 2018/19 mar­ket­ing year that be­gan on Oct. 1 - the low­est since 2009/10 - as farm­ers in the western states of Gu­jarat and Ma­ha­rash­tra are re­port­ing poor yields, said Chi­rag Pa­tel, chief ex­ec­u­tive at ma­jor ex­porter Jay­deep Cot­ton Fi­bres Pvt Ltd.

Rains in Gu­jarat and Ma­ha­rash­tra, which ac­count for more than half of In­dia’s cot­ton pro­duc­tion, were nearly a quar­ter be­low nor­mal dur­ing the June-Septem­ber mon­soon sea­son.

“Many farm­ers had to up­root plants after first cot­ton pick­ing. There won’t be a sec­ond or third pick­ing like ev­ery year,” Pa­tel said.

In­dia pro­duced 37 mil­lion bales in 2017/18 and was ex­pected to har­vest 36.1 mil­lion bales this year, ac­cord­ing to the state-run Cot­ton Ad­vi­sory Board.

“De­spite higher prices, sup­plies are not pick­ing up. The crop is lower than es­ti­mated,” Pa­tel said.

New sea­son cot­ton sup­plies usu­ally start from Oc­to­ber and peak in Novem­ber and De­cem­ber. But spot sup­ply in the past two months only reached around 7 mil­lion bales com­pared to 10 mil­lion bales a year ago, said Atul Gana­tra, pres­i­dent of the Cot­ton As­so­ci­a­tion of In­dia (CAI).

Pink boll­worms also hit plan­ta­tion in Ma­ha­rash­tra, he said.

In­dian farm­ers have adopted ge­net­i­cally-mod­i­fied seeds known as Bt cot­ton that are re­sis­tant to boll­worms, but it hasn’t stopped the in­fes­ta­tions. Pink boll­worms con­sume the fi­bre and seeds in­side a cot­ton plant’s boll, or fruit, and yields fall.

Lim­ited sur­plus

In June, traders were ex­pect­ing In­dia to ex­port as much as 10 mil­lion bales amid strong de­mand from China due to the trade dis­pute be­tween Bei­jing and Wash­ing­ton.

But smaller crop size will limit sur­plus for over­seas sales and lift lo­cal prices, said Arun Sekhsaria, man­ag­ing di­rec­tor of ex­porter D. D. Cot­ton. “We could ex­port 5 to 6 mil­lion bales. Ex­port de­mand is likely to pick up in com­ing months as In­dian cot­ton is cheaper than other ori­gins,” Sekhsaria said.

In­dian cot­ton is be­ing of­fered around 84 to 85 cents per lb, cost and freight, to buy­ers in Bangladesh and Viet­nam, ver­sus around 90 cents for those from the US and Brazil, deal­ers said.

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