India's Cotton Production Is Likely to Decline by 5%

India's cotton production for the current year is likely to decline by five percent from last year's 37.3 million bales of 170 kg each to 35.4 million bales, according to the estimates released by the cotton Association of India (CAI).
 
Largely impacted by delayed arrival of rains in Andhra Pradesh and Maharashtra, the country's cotton cultivation acreage has declined by three percent this year. However, the crop prospects look positive, the association said in a press release.
 
Including the opening stocks of 5.3 million bales and imports of 1 million bales, the total cotton stocks would reach around 41.7 million bales, CAI noted.
 
The association further stated that after meeting domestic consumption of 26.6 million bales, the country would be left with 15.1 million bales of cotton to cater to the export market, which is higher than the 12.7 million bales exported from the country during last year.
 
Much lower than the CAI's estimates, the Cotton Advisory Board (CAB) has projected the country's crop output at 33.4 million bales. The estimate is five percent lower than the Board's last year's estimate of 35.3 million bales.
 
With sluggishly moving global economies, particularly China, which accounts for around 65 percent of India's cotton exports, CAB foresees India's cotton exports to decrease by 45 percent from last year's 12.8 million bales to 7 million bales this year.
 
It also expects the high global inventory of 13.9 million bales to restrain India's exports. In such a scenario, CAI recommends that the Government should adopt export friendly policies.
 
Envisaging a sharp decline in cotton prices, the Indian Government recently hiked the minimum support price (MSP) for the commodity. MSP of medium staple cotton has been increased from Rs. 2,800 per quintal to Rs. 3,600 per quintal, while that of long staple cotton has been hiked from Rs. 3,300 to Rs. 3,900 per quintal.
 
The Government's effort is expected to bring stability to cotton prices which have already undergone a sharp fall.