 "Cotton cultivation in next kharif may dip 15% if prices remain low")
After witnessing a year of record production, cultivation of cotton in 2015-16 is projected to fall 20 per cent in India. According to cotton traders and mill owners, on the one hand, while global demand for cotton and cotton yarn dropped in recent months, cotton prices also fell owing to lack of good quality cotton in the market.
Arun Dalal, a leading cotton trader and exporter, estimated that low prices and lower demand may discourage farmers leading to reduced cotton cultivation in 2015-16 by 15-20 per cent.
“Prices fell due to several reasons, including oversupply and reduced demand. Add to that, prices also fell due to non-availability of good quality cotton. This has discouraged farmers heavily. If the situation remains more or less the same till April, cotton cultivation for 2015-16 in India could fall by 15-20 per cent,” said Dalal. In 2014-15, cotton area was in around 13 million hectares in India for 2014-15, about 1.5 million hectares higher than previous year.
“China also stopped importing cotton that impacted global cotton markets. Also, demand from mills also came down drastically due to reduced exports. All these factors led to fall in cotton prices. If prices do not improve much or global as well as domestic markets do not improve, then there could be fall in cotton cultivation by at least 10 per cent,” said K Selvaraju of South Indian Mills Association.
This year, cotton yarn exports too have come down, from 140 million kg last year to about 100 million kg this year.
Globally also, cotton cultivation is projected to be down by six per cent in 2015-16. “Low cotton prices are expected to persist through the rest of 2014-15 when farmers in the northern hemisphere make their planting decisions. As a result, world cotton area in 2015-16 is projected down six per cent to 31.6 million hectares. Assuming a world average yield of 777 kg/ha, world cotton production is forecast to fall six per cent to 24.6 million tonnes, which is the lowest volume since 2009-10,” said the International Cotton Advisory Committee (ICAC).
At the same time, ICAC expects world cotton consumption to increase by two per cent to 24.7 million tonnes, making 2015/16 the first time in five seasons where consumption overtakes production. "Although consumption could surpass production by about 100,000 tons, this would only be a small dent in the large stockpile of cotton," the global body further stated.
Arun Dalal, a leading cotton trader and exporter, estimated that low prices and lower demand may discourage farmers leading to reduced cotton cultivation in 2015-16 by 15-20 per cent.
“Prices fell due to several reasons, including oversupply and reduced demand. Add to that, prices also fell due to non-availability of good quality cotton. This has discouraged farmers heavily. If the situation remains more or less the same till April, cotton cultivation for 2015-16 in India could fall by 15-20 per cent,” said Dalal. In 2014-15, cotton area was in around 13 million hectares in India for 2014-15, about 1.5 million hectares higher than previous year.
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Global factors like decline in cotton yarn exports and overall global demand for cotton being low, cotton prices took a hit globally. From an average 90 cents per pound, cotton prices globally ranged between 50 cents and 60 cents per pound in some cases.
“China also stopped importing cotton that impacted global cotton markets. Also, demand from mills also came down drastically due to reduced exports. All these factors led to fall in cotton prices. If prices do not improve much or global as well as domestic markets do not improve, then there could be fall in cotton cultivation by at least 10 per cent,” said K Selvaraju of South Indian Mills Association.
This year, cotton yarn exports too have come down, from 140 million kg last year to about 100 million kg this year.
Globally also, cotton cultivation is projected to be down by six per cent in 2015-16. “Low cotton prices are expected to persist through the rest of 2014-15 when farmers in the northern hemisphere make their planting decisions. As a result, world cotton area in 2015-16 is projected down six per cent to 31.6 million hectares. Assuming a world average yield of 777 kg/ha, world cotton production is forecast to fall six per cent to 24.6 million tonnes, which is the lowest volume since 2009-10,” said the International Cotton Advisory Committee (ICAC).
At the same time, ICAC expects world cotton consumption to increase by two per cent to 24.7 million tonnes, making 2015/16 the first time in five seasons where consumption overtakes production. "Although consumption could surpass production by about 100,000 tons, this would only be a small dent in the large stockpile of cotton," the global body further stated.