USDA projects 22% slump in India's cotton output

India's 2005-06 (July-June) cotton output is expected to decline 22 per cent to 19 million bales (1 bale=170 kgs) due to lower yields and crop area, according to a report by the United States Department of Agriculture.

Consumption is seen rising to 20.4 million bales on the back of low prices and strong demand for textiles, the report said.

Cotton imports are projected lower at 700,000 bales against 900,000 bales in 2004-05 and exports at 1 million bales, the report said.

According to the USDA, the estimated production of 19 million bales during the July-June marketing year is the country's second highest annual production after the record production of 23.2 million bales in 2004-05.

The Cotton Advisory Board, an Indian state-owned body, has estimated local cotton production for the 2004-05 crop year (October-September) at 23 million bales against 17 million bales in 2003-04.

The total area under cotton cultivation is set to decline to 8.8 million hectares next year from 9.0 million hectares this year, the report said.

The decline will be mainly in Maharashtra and Andhra Pradesh because of an anticipated shift towards competing crops like sugarcane, tobacco and chillies, the USDA said.

However, the planted area in other cotton growing states is forecast to stay the same or marginally rise as lower prices were largely offset by higher yields, thus stabilising net farm returns.