Cotton output likely to decline by 17%

India's cotton output is likely to hit a five-year low in the ensuing crop year 2014-15 (October-September), due to a steep decline in sowing area on delayed and uneven distribution of monsoon rains because of the El Niño phenomenon.

According to sources, the ministry of textiles as well as the ministry of agriculture, have estimated cotton output at 30 million bales (1 bale = 170 kg) for the next crop year based on the area covered under the cash crop as of now. The ministries' cotton output estimate, however, represents a 17 per cent decline from last year's production of 36.5 million bales estimated by the ministry of agriculture in the third advance estimate released on May 24.

The decline assumes significance in the wake of sustained pressure on cotton prices for the past three years. Given that the current lower demand from the domestic textile industry and China, India's largest export destination, are unlikely to rebound in the coming months, lower output will support cotton prices.

"Both the ministry of agriculture and the ministry of textiles have forecast India's cotton output at 30 million bales in the crop year 2014-15 on the basis of a steep decline in sowing area. These ministries, however, believe cotton supplies will remain comfortable next season," said a senior government official.

With a revival in the monsoon, sowing area under cotton has intensified. Still, the overall sowing area under cotton was 44 per cent lower at 5.6 million hectares (ha) as on July 18, compared with 10 million ha as on the corresponding date last year.

Meanwhile, the Cotton Advisory Board under the ministry of textiles has forecast India's output to remain at 39 million bales for 2014-15, marginally higher than the ministry's estimate of 36.5 million bales in the current year.

Sowing of cotton starts ahead of the monsoon rains in the second fortnight of March and ends with the onset of heavy rains by June-end. Sowing of cotton was delayed by over a month this year, due to a delay in the commencement of monsoon rains.