Cotton production in India, the world’s second-largest producer, is expected to climb to an all-time high while the monsoon rains prompt farmers to switch from soybeans and peanuts, as the crops consumes less water.
The cotton harvest in India may expand as much as 2.6% to 40 million bales of 170 kilograms each year starting October 1, according to B.K Mishra, chairman of the Cotton Corporation of India. However, as the cotton area increases from 11.7 million hectares (28.9 million acres), the harvest will be delayed by the worst start to the monsoon season since 2009, Mishra added. The agency buys the crops at government set minimum prices.
Futures for the crop have fallen for 11 straight consecutive weeks in New York, marking the longest losing-streak in 55 years on worries that the global inventories are climbing as demand from China, the largest user, slows.
Cotton futures on ICE Futures US dropped 15% in June, the most since May 2012 and traded 0.8% lower at 67.55 cents a pound on Thursday. Prices climbed to a two-year high of 97.35 cents on March 26. The contract for July delivery on the Multi Commodity Exchange of India slid 0.3% to 18,390 rupees ($306) per bale on Thursday, extending loss this year to 7.2%.
India will be struggling to increase exports as demand from China, the largest user of Indian cotton, remains weak and supplies from the US rising, Desai said. Shipments in 2013-2014 are seen at 11.4 million bales, the Cotton Advisory Board said.
Free Reports:
Seeding of crops from rice to soybean was delayed in June by a 43% deficit in monsoon rain, which accounts for more than 70% of India’s annual precipitation. The rain shortage narrowed to 25% on Wednesday, increasing planting, according to the India Meteorological Department.
A report from India’s Agriculture Ministry showed that Indian farmers had planted cotton on 5.6 million hectares by July 18, which is 44% less than the 10.05 million hectares that was used to plant cotton during the same period in 2013.
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