Cotton acreage seen falling to 7-year low

Cotton planting in the country is likely to fall to the lowest in seven years in the 2016-17 marketing season, as farmers switch to other crops, potentially cutting production and exports of the fibre.

India is the biggest producer of cotton in the world. A pest attack in key cotton-growing states and forecasts of good monsoon rains are also prompting farmers to plant other crops such as sugarcane, peanut and pulses.

Lower cotton exports could support global prices, now trading near their strongest level since August 2015, and boost exports from rivals like Brazil, Australia and the US.

“We are expecting seven per cent drop in area,” Dhiren Sheth, president of the Cotton Association of India told Reuters. He said farmers would likely opt to plant pulses and peanuts, also known as ground nuts. A seven per cent reduction would cut the country's cotton planting area to around 11 million hectares in the next marketing year that starts on October 1, the lowest since 2009-10.

That compares to 11.9 million hectares in the current marketing year. An attack of whitefly pest in two northern states and lower prices during harvest is also prompting farmers to switch to other crops, said Paresh Valia, an exporter based in Bhavnagar district in western Gujarat, the top cotton producing state.

Most Indian farmers start planting cotton with the onset of monsoon rains in June, although some with irrigation facilities can start as early as May.

The India Meteorological Department had forecast above average rainfall during the June-September monsoon season, after two straight years of drought that ravaged crops.

Good monsoon rains could push farmers in Maharashtra, the second-biggest cotton producer, to instead plant sugarcane, which needs more water, said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt Ltd, a leading exporter.

Patel expects India's cotton output to fall 7.3 percent to 32 million bales in 2016/17.

Lower production could lift domestic prices as the state-run Cotton Advisory Board estimates opening stocks for the next marketing season to fall by a third to 3.5 million bales.