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India’s cotton acreage may shrink


India’s 2016-17 cotton production is forecast at 28.5 million bales. Yields are expected higher through a combination of better crop, pest, and weed management practices and a probable normal monsoon after two consecutive years of deficient rain.

Mill consumption is forecast lower than the 2015-16 marketing year as demand remains weak.

Planting decisions are largely driven by expected price realization, but additional factors such as the relative cost of production of competing crops, water availability, anticipated minimum support prices and a timely monsoon are crucial factors.

Farmers consistently exhibit strong preference for cotton relative to other crops. But India’s cotton yields remain significantly lower than the global average of 800 kg per hectare, a difference attributed largely to the relatively low plant populations that farmers seed in order to create rows that are wide enough for bullocks and workers to traverse. The area may decrease over the long-term as rising food demand and efforts to encourage food crop production prompt farmers to shift to other crops.

The advent of biotech cotton has improved the predictability and stability of cotton as a crop which has supported the expansion of cotton area in recent years. Arrivals may be lagging compared to previous years but larger supplies are being held in the supply chain among various stakeholders.