India’s 2012-13 cotton output may fall to 32.3 mn bales: USDA

India’s 2012-13 cotton output may fall to 32.3 mn bales: USDA

New Delhi: India’s cotton output is likely to dip by two million bales to 32.3 million in the 2012-13 marketing year (August-July) as farmers are likely to switch to better-priced alternative crops amid unclear cotton export policy, according to a USDA report.

India, the world’s second biggest cotton grower, had produced a record 34.25 million bales in the 2011-12 marketing year. One bales contains 170 kg of cotton.

“Cotton production is forecast to decrease by two million bales to 32.3 million bales as area is expected to drop by 10%, the US Department of Agriculture (USDA) said in its latest report.

But the domestic cotton consumption is expected to increase to 26 million bales in 2012-13, from 25.3 million bales in 2011-12.

However, India’s exportable cotton supply would be only six million bales in 2012-13, as against 11.75 million bales this year, given an expected drop in production and higher domestic demand, it noted.

The USDA, however, said that “if the Government of India increases the minimum support price (MSP) for cotton significantly, planting intentions could shift."

Farmers have a number of planting options, as high prices of peanuts, soybeans, guar and maize could prompt them to shift away from cotton in central, western and northern India, it added.

According to the report, Indian farmers may decide to try crops that are subject to fewer policy-driven market disruptions as it is not clear whether the government will allow fresh cotton exports before the start of the 2012-13 marketing year or if the government will develop a new procedure for regulating exports.

On 5 March, India had banned cotton exports briefly for a week. It has decided to permit export of cotton that was registered before the ban period.