India’s Cotton Production Trend
In cotton season 2019-20 (Oct-Sept), India produced 357 lakh bales of cotton, 8.18% more than the previous season. Central zone – which includes Gujarat, Maharashtra and Madhya Pradesh – has been the highest cotton producing zone in the country for decades now. But growth-wise southern zone has performed extremely well compared to the other two zones. Southern zone perceived a growth of 24.5%, while central zone and northern zone have perceived 4.3% and 0.8% growth respectively in 2019-20.
State-wise, Gujarat remains the topmost state with production of 89 lakh bales. Maharashtra is just one lakh bale shorter than Gujarat. The lowest cotton producing state is Tamil Nadu with just five lakh bales of cotton. All the zones have perceived positive growth in 2019-20, while the previous season, central and south zone had witnessed a decline in the production of cotton.
The cotton production in the north totalled to 59.5 lakh bales and witnessed a growth of 0.8% in 2019-20 over the previous season. The zone stakes a share of 17% in the total cotton production of India. The productivity declined by 13.7% to 539.18 kg per hectare. Rajasthan remains as the topmost state in the zone, but registered no change in growth. The production of cotton in Rajasthan remains at 26 lakh bales and produces around 44% of the total cotton of the zone and 7% of the total cotton production of India. The state gave a yield of 580.81 kg/hectare in 2019-20 season, but declined 17.3% over the previous season.
Haryana has kept improving every season. In the last season, the state produced 24 lakh bales of cotton and witnessed a growth of 4.3% in 2019-20. The state stakes a share of 40% in the zone and 7% in the total cotton production of India. The state registered a growth in cotton productivity by 2.18% to 564.32 kg/hectare in 2019-20 compared to the previous season where the state gave a yield of 552.26 kg/hectare.
Punjab has witnessed a negative growth for a second consecutive season. The state witnessed a decline of 0.5% with total cotton production of 9.5 lakh bales in 2019-20 season. Punjab shares a stake of 16% in the zone and 3% in the total cotton production of India. Punjab yielded 412 kg cotton per hectare.
Central zone accounts for 55% share in the total cotton production of India. In the last season (2019-20) the zone’s production totalled to 195 lakh bales of cotton and witnessed a positive growth of 4.3% over the previous season. This zone accumulated a yield of 428.63 kg per hectare with growth of just one percent. Gujarat is the highest cotton producing state in the zone as well as in the country. In 2019-20 season, the state produced 89 lakh bales of cotton and perceived a growth of 1.7% over the previous season. The state takes 46% of the share in the zone and 25% in the total cotton production of India. Gujarat gave a yield of 570.30 kg per hectare with growth of 2%.
As per the last season’s records, Maharashtra is just one lakh bale of cotton away from Gujarat’s production. The cotton production in Maharashtra totalled to 88 lakh bales of cotton and registered a growth of 16.6% in 2019-20 over the previous season. The state stakes 45% in the zone and 25% in the total cotton production of India and gave a yield of 337.62 kg/hectare with a growth 11% in 2019-20 over the previous season. In central zone, Maharashtra has gained the highest growth in productivity of cotton crop.
In this zone, Madhya Pradesh has recorded a negative growth of 25% with a production of 18 lakh bales of cotton. The state holds a share of 9% in the zone and 5% in the total cotton production of India. Here the productivity dropped significantly by 29.2% to 470.77 kg per hectare.
South India remains the second largest cotton producing zone in the country. In the last season, the zone perceived a growth of 24.5% with a total production of 95.5 lakh bales of cotton. The region stakes a share of 27% in the total cotton production of India. South zone registered a yield of 457.22 kg/ hectare in 2019-20 with a growth of 14.9%.
Telangana leads the board in the region. The state produced 54 lakh bales of cotton in 2019-20 season, perceiving a growth of 25.6%. Around 56% production of cotton in the zone is cultivated by Telangana, while the state shares 15% in the total production of cotton in India and registered a yield of 431.59 kg/hectare.
Andhra Pradesh which stakes 19% share in the zone and 5% in India’s total production of cotton has perceived a growth of 27.6% in the last season of cotton. The cotton production in the state totalled to 18.5 lakh bales. The state’s productivity has improved immensely with growth of 21% to 480.89 kg/hectare in 2019-20 over the previous season.
Karnataka too perceived a positive growth of 26.7%. Cotton production in the state totalled to 19 lakh bales, accounting for a share of 20% in the zone and 5% in the total production of India’s cotton. Amongst all the states, Karnataka has perceived the maximum productivity growth of 42.8% with a yield of 507.06 kg/hectare. No changes have been registered for Tamil Nadu. The cotton production remains at 5 lakh bales. The state just shares 5% of the production in the zone and 1% in the total cotton production of India. Tamil Nadu registered a drop of 17.9% in productivity, bringing a yield of 400 kg/ hectare.
Indian Cotton Exports
India’s cotton (not carded or combed) exports have witnessed a rise of 6.16% in first eight months (Jan-Aug) of 2020 totalling to US$ 817.10 million compared to the corresponding period of last year (CPLY). India increased its raw cotton volumes by 14.45% in Jan-Aug 2020 with a quantity of 489479.13 thousand kgs. Though raw cotton exports have risen, the unit value realisation (UVR) has declined by 7.24% for the same period. In Jan-Aug 2020, raw cotton was traded at US$ 1.67 per kg, while in the CPLY it was sold at US$ 1.80 per kg on an average.
From the total raw cotton exports, 95% of the exports come from India’s cotton staple length 28.5 mm – 34.5 mm. The exports of this commodity totalled to US$ 776.10 million with growth of 7.73% in Jan-Aug 2020 compared to CPLY. This product on average was exported at a price of US$ 1.68 per kg.
Cotton exports to China dropped by 19% to US$ 202.49 million in 2020 (Jan – Aug) over the same period of the previous year. Around 123.80 million kgs of cotton was exported to China during the same period and on an average cotton was exported at a price of US$ 1.64 per kg.
Bangladesh remains as the top export market for Indian cotton. The export of the commodity perceived a growth of 48.39% to US$ 450.57 million in 2020 (Jan- Aug). Cotton with a quantity of 261.40 million kgs was shipped to Bangladesh in 2020 (Jan-Aug).
To Bangladesh, Indian cotton exporters trade the commodity at a price of US$ 1.72 per kg. Cotton exports to Vietnam dropped by 19%, while exports to Indonesia were up by 412.31% in January to August 2020.
Cotton Prices In India
Indian cotton prices were quite volatile in last cotton season. Prices had picked up in the beginning of the season and continued to flare till March 2020. After Covid-19 pandemic hit India and put the country under a strict lockdown, the cotton prices started weakening weekly. From August-mid the prices moved on a recovery mode, but the domestic prices still remained lower compared to pre-lockdown. In the beginning of 2019-20, Shankar 6 was around Rs 41,400 per candy, and the price went down to its lowest to Rs 36,300 per candy in July 2020. Shankar 6 gained momentum in the month of August with a price of Rs 38,200 per candy Other varieties of cotton too have witnessed the same drift due to the pandemic, but some started showing recovery in July, while some gained in later days of August.
The Ministry of Agriculture and Farmers Welfare, Government of India has fixed the MSP price for cotton fibre for this new cotton season 2020-21.
On an average medium staple cotton having a length of 24.5 to 25.5 mm has been priced at Rs 5515 per quintal, while in the previous season it was fixed at Rs 2522 per quintal.
And for long staple cotton having a length of 29.5 to 30.5 mm on an average was prices at Rs 5825 per quintal, in the previous season the price was Rs 5550 per quintal. A premium of Rs 30 per quintal will be applicable to the staple length of 24.5 – 25.5 mm of cotton with a micronaire value in the range of 3.8 to 4.2 over and above the MPS. And if the micronaire happens to be less than 3.8 or more than 5.1, the MSP will be lower by Rs 15 per quintal for every 0.2 micronaire. Under the long staple cotton, Shankar 6 cotton MSP for the new season is fixed at RS 5775 quintal, while Bunny/Brahma is fixed at Rs 5825 per quintal of cotton and H4/ MECH is priced at Rs 5725 per quintal Whereas for medium staple cotton, Jayadhar is priced at Rs 5265 per quintal and V-797 at Rs 5315 per quintal. J-34 variety in medium long staple class is priced at Rs 5515 per quintal. Bengal Deshi cotton is priced the lowest at Rs 5015 per quintal.
USDA: World Cotton Market and Trade
As per USDA’s latest report, China’s State Reserve sale for 2020 concluded on September 30. A total of 504,000 metric tons of cotton was sold. Xinjiang cotton accounted for 283,000 tons of sales, of which just 23,000 tons were Production and Construction Corp (XPCC) cotton.
Overview for 2020-21 season
Several reports have estimated that the world’s cotton production is projected to drop in this new season 2020-21 by 5% compared to 2019-20 estimates. India is expected to remain the largest cotton producer in the world followed by China, United States, Brazil and Pakistan. The forecast shows lower world production, lower beginning and ending stocks, higher use, and higher trade.
Production is lowered in Mali, Pakistan, and Greece, more than offsetting an increase in Nigeria. Consumption is raised in China and India. Global trade is slightly higher on higher imports for China. The US forecast shows marginally lower production.