Cotton production growth rate down to 3.17%

The country may see a drastic fall in the production growth rate of cotton for 2008-09, according to a report from the National Commodity and Derivatives Exchange (NCDEX).

The overall crop in the coming season will be 32.5 million bales (1 bale =170kg) as against 31.5 million bales in the cotton year 2007-08 (October-September), the report said.

NOT SO SOFT

Overall crop production in the coming season is expected to be 32.5 million bales (1 bale = 170 kg) as against 31.5 million bales in 2007-08

The decline in acreage, which was at 6.97 million hectares till July end, is down 0.95 million hectares compared to the same period last year

The US Department of Agriculture has forecast global production for 2008-09 to be 117.9 million bales, a deficit of 8 million bales, against the expected consumption of 125.9 million bales

Last year, the country registered a cotton production growth rate of 12.5 per cent at 31.5 million bales compared with the previous year’s output of 28 million bales. However, with only 32.5 million bales expected this year, the rate has dropped to 3.17 per cent.

This is mainly because of decline in acreage, which was at 6.97 million hectares till July end, down 0.95 million hectares compared to the same period last year.

The United States, the largest producer of cotton, had a 20 per cent acreage reduction in 2007-08. Now, the US Department of Agriculture (USDA) has forecast global production for 2008-09 to be 117.9 million bales, a deficit of 8 million bales, against the expected consumption of 125.9 million bales. In the US alone, production is projected to fall by more than 1 million tonnes to 3.1 million tonnes.

According to the report, this shortfall will be the highest since 1993-94. Moreover, the International Cotton Advisory Committee says the overall global cotton production is expected to decline by 5 per cent to 24.9 million tonnes in 2008-09 on account of a decline in both area under cultivation and yield.

Simultaneously, the carryover stock is also projected to fall by nearly 12 per cent to 10.7 million tonnes in the current season. This clearly suggests that once again, there will be pressure on domestic cotton and prices of the commodity will spiral to new highs as was the case in the current season, when prices touched historical highs of over 40 per cent.

On the domestic front, the present ruling prices of cotton varieties such as J-34 and Sankar-6 are Rs 27,400 and Rs 28,300 a candy (1 candy = 356 kg) respectively.

The textile firms, including big companies, have said they would prefer to procure cotton in the main season to avoid high prices later. Despite the rising cost of cotton, the textile manufacturers have been unable to pass on the rise in raw material cost to garments.