The Hindu Business Line : Cotton output may rise by 5% in 2007-08 season

The 2007-08 cotton season could once again prove beneficial for the country going by domestic and global trends. Southwest monsoon of course holds the key to a bountiful crop. India may well be in a position to export significant quantities of cotton.

Crop size

Although it is premature at this point in time to put any specific number on the crop size, going by trends of last three years, it may be reasonable to assume an expansion in cotton area (especially under Bt. Cotton) and improvement in yield. From the current year's 270 lakh bales, output has the potential to increase by about five per cent.

If realised, it can potentially lead to a fairly significant export surplus, subject to quality.

Fortunately, the international market conditions are turning favourable with export prices expected to firm up.

However, a strong rupee may blunt India's export competitiveness, which could result in downward pressure on domestic prices.

Global output

While global cotton production is forecast to decline by one per cent to 25.1 million tonnes, world mill use is expected to expand by 2.6 per cent to 26.8 mt in 2007-08.

In other words, output will once again trail consumption, resulting in drawdown of stocks and higher prices.

Driven by China, India and Pakistan, Asia is expected to account for 55 per cent of world cotton production, up from 53 per cent in 2006-07, and for 76 per cent of world mill use in 2007-08, up from 74 per cent in 2006-07, the Washington-based International Cotton Advisory Committee (ICAC) said in its latest report.

Asian dominance

In other words, Asia's dominance of the world cotton sector in terms of production and consumption set to continue.

China's cotton import requirement is forecast to rebound. World cotton imports are projected to rise to 8.9 mt (8.3 mt).

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