The consistently high cotton prices in India in 2016-17, and which is still continuing in this financial year, will encourage Indian farmers to grow more this year. Meanwhile, the demand for cotton, especially by mills, is also rising, which will result in a consistent fall in year-end stocks, says the International Cotton Advisory Committee (CAC).
The total area under cotton will go up by 5 per cent globally to 30.8 million hectares (mn ha) in the 2017-18 cotton year (July-June). On India, it says this is forecast to increase by seven per cent to 11.3 mn ha in 2017-18, as farmers are encouraged by better returns due to high cotton prices and improved yields in 2016-17. Assuming yield is similar to the five-year average, production could increase to just under six million tonnes.
Prerana Desai, VP, Edelweiss Agri Services and Credit, said: “Cotton has seen a unique season. In response to demonetisation, farmers delayed selling their produce and dictated the price through the season. As the seasonal price did not play out, the mills were caught unaware and missed out on an opportunity to make purchases at the lower prices. Farmers in Rajasthan played a crucial role this season. Lower crop, along with increased local consumption in Gujarat, increased the raw cotton deficit in Punjab and Haryana, second largest consuming region after Tamil Nadu. Import parity for mills in the north emerged in March itself and these have ended up importing a very large quantity of US cotton this season. This has improved their yarn realisation and US cotton might have earned some loyalty in this traditionally non-importing region of India.”