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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

11 June 2013

USDA GAIN: India Cotton and Products Update May 2013 - June 2013USDA GAIN: India Cotton and Products Update May 2013 - June 2013

Cotton planting is underway in northern India where the crop is largely irrigated. Planting is slightly ahead of the year-ago pace and is approaching 1.0 million hectares (eight percent of area). The monsoon has reached southwestern India on time and cotton prices are slightly higher than a year ago, both factors are supportive of the current area and production forecasts for 2013/14. 2012/13 exports are about to breach the USDA Washington estimate. FAS Mumbai recommends an increase to 7.2 million 480 pound bales to capture anticipated exports during the balance of the marketing year. An expected increase in monthly imports has yet to begin, but higher imports are projected before the end of the local marketing year.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Area and Production

Cotton planting across northern India, where the crop is largely irrigated, for the kharif (summer) 2013/14 crop had progressed to 935,000 ha as of May 24, slightly higher compared to last year’s area of 913,000 hectares at the same time. Temperatures across northern India have been higher than usual which has sparked some concern about the effects of the extreme heat on emerging cotton plants, but temperatures have moderated over the past few days, and high temperatures are not unusual at this time of year. The monsoon reached the coast of southwestern India on time and meteorologists are optimistic that early progress will be normal which should enable sowing in the central and southern India to proceed apace. While winter rains are normally scant (an inch or less) across major cotton growing areas, winter rainfall was below normal in Gujarat and Maharashtra, India’s largest cotton producing states. Reservoir levels in some areas are also well below average which could have some effect on farmer’s planting decisions, but the crop is primarily rain-fed in central India and farmer’s planting activities are more likely to be tied to the performance of the monsoon than reservoir levels.

Seed cotton prices have consistently traded near 40 cents/lb (see Figure 1b) which is generally above the price levels that farmers observed in 2012 when they planted 11.8 million hectares despite a delayed start to the monsoon. It is not clear when the government will announce the new minimum support price for cotton. While the 2012/13 price was announced prior to the onset of the bulk of cotton planting, in the past, the price has often been announced after planting has concluded. As discussed in recent reports, a significant increase in the minimum support price could lead to widespread procurement if India’s government-established price floor is set too high relative to international cotton prices. Without a new minimum price in place, farmers may consider crops such as guar in parts of the north and soybeans in central India, but cotton area is expected to increase slightly as long as market prices are attractive and rainfall is adequate. Cotton’s relative drought tolerance can also make it an attractive planting option if the monsoon is weak in certain areas. Seed and fertilizer supplies appear to be adequate across major cotton growing areas and production and area estimates are unchanged.


On May 26, 2013, cotton arrivals had reached 31.17 million 170 kg bales (24.3 million 480 lb bales / 5.3 mmt) compared to 32.08 million 170 kg bales (25 million 480 lb bales / 5.4 mmt) last year. The three percent reduction in the pace of arrivals is supportive of the lower (compared to a year ago) 2012/13 production estimate. High temperatures may also have prompted farmers to hold cotton as stocks lose moisture and weight in hot weather. Daily arrivals are reported between 80,000 to 85,000 170 kg bales. The Cotton Corporation of India continues to auction stocks of limited quantities on a daily basis. Total sales have reached 400,000 170 kg bales leaving 1.9 million 170 kg bales of stocks with the Cotton Corporation of India.

Trade and Domestic Consumption

The Indian rupee has weakened to its lowest level in the past seven months, but export demand remains weak in the absence of Chinese buying. Nevertheless, preliminary trade data suggest that exports reached 8.9 million 170 kg bales (6.9 million 480 lb bales / 1.5 mmt – see Table 1b) through the end of May, indicating that the 2012/13 export estimate established by USDA Washington analysts is about to be reached. FAS Mumbai again recommends an increase in the 2012/13 export estimate to account for anticipated exports during the balance of the marketing year. As reported previously, Indian mills have reportedly purchased relatively large quantities of cotton, FAS Mumbai believes that the bulk of that cotton will arrive during the 2013/14 marketing year and has adjusted the PS+D accordingly.

Fueled by strong yarn exports to China and Bangladesh, 2012/13 consumption continues to exceed FAS Mumbai expectations and the PS+D now reflects the USDA Washington estimate. Yarn export registrations for April have risen by more than 85 percent on a year-to-year basis. Demand for yarn from local buyers and exporters is expected to stay firm over the next two months.

2011/12 PS+D changes reflect adjustments recommended in previous reports. Changes to the 2013/14 import and export forecasts reflect previous FAS Mumbai analysis and the consumption forecast is higher than previously forecast by FAS Mumbai, but remains below the USDA Washington forecast. Forecast ending stock levels for 2012/13 and 2013/14 exclude loss adjustments of 500,000 bales.

Table 1a: Estimate of 2011/12 Cotton Exports

  1. \ Official total reflects estimates from the Directorate General of Foreign Trade, for Harmonized Tariff Schedule code 5201 – raw cotton.

Table 1b: Estimate of 2012/13 Cotton Exports

  1. \ Official sub-total reflects estimates from the Directorate General of Foreign Trade, for Harmonized Tariff Schedule code 5201 – raw cotton.
  2. \ Preliminary official data from the Directorate of Commercial Intelligence and Statistics. These data are subject to revision, but are considered a fairly reliable predictor of final official data.
  3. \ FAS Mumbai estimate

June 2013

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