Agri Business

Monsoon holds the key to cotton acreage this year

M. R. Subramani Chennai | Updated on March 12, 2018 Published on May 28, 2013

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The cotton industry is divided over cotton plantings this year but it is unanimous in its view that monsoon will have a final say over the sowing pattern.

“Planting intentions of growers look normal at around 110 lakh hectares. But the question is whether the acreage will be maintained. Only timely monsoon will ensure that,” said A. Ramani, a cotton trade analyst.

Problems

The problem with areas under cotton, especially in Gujarat, Maharashtra and Andhra Pradesh, is that they have been going through a prolonged dry period.

“Pre-monsoon rainfall in these areas has been poor,” said Ramani.

Besides that the lack of rainfall has affected soil moisture.

“Cotton area could drop by some five per cent since growers are showing interest to shift to guar (cluster beans),” said Anand Poppat of the Saurashtra Ginners Association. “This is true with regard to Gujarat,” he said.

“There could be 10 per cent drop in cotton acreage since guar is definitely beneficial for growers.

“But the area under cotton is expanding in even States such as Rajasthan as yeoman service is being rendered by the Cotton Development Research programme,” said M.B. Lal, former Cotton Corporation of India chief.

After a record coverage of 121.78 lakh hectares in 2011-12, the area under cotton dropped to 116.14 lakh hectares last season.

Growers are likely to be interested in guar since the Forward Markets Commission has lifted the ban on futures trading in guarseed and guar gum. This, industry players feel, could lead to rise in prices.

“Last year, the area dropped in Maharashta and Gujarat due to poor monsoon,” said Lal.

minimum support price

“The other aspect that could lead to rise in area under cotton is hike in minimum support price,” said Ramani.

With elections to the Lok Sabha likely early next year, the UPA Government would be keen to increase the support price.

For 2012-13, the support price was raised to Rs 3,600 from Rs 2,800 a quintal for medium staple cotton and to Rs 3,900 from Rs 3,300 for long staple cotton.

“A 10 per cent in support price is likely. If that is raised then cotton price will also gain. It could encourage growers to sow cotton,” said Ramani.

“A higher support price will raise the acreage to some extent. It, in fact, will ensure parity in Indian cotton price compared with rates in China,” said Poppat.



china cotton

Currently, Chinese cotton is ruling at around Rs 18,300 a quintal, while its comparable Indian quality is quoting Rs 11,000.

Cotton prices in the coming season starting October could be good.

The price for Shankar-6 that is in demand for exports could rule around Rs 38,000 for a candy of 356 kg.

“If the support price is hiked, the it could be Rs 37,000-38,000,” said Ramani.

Currently, Shankar-6 is quoting at Rs 37,900-38,200 and experts see prices holding at these levels in view of poor arrivals.

Exports, on the other hand, are dull currently due to absence of Chinese demand. “China has a good inventory and, therefore, it is not buying,” said Poppat.

Besides monsoon, the US crop could also buoy up things.

According to Cotlook, the crop in the US could be around 10 per cent lower this year. This could boost Indian cotton prospects.

Cotlook has also projected India’s cotton crop next season unchanged at 340 lakh bales (of 170 kg each).

Bt or genetically-modified varieties that make up 95 per cent of the area under cotton in the country will continue to dominate, according to Ramani.

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Published on May 28, 2013
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