India’s Cotton Exports All Set To Drop As Pink Bollworms Hurt Crop

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India is likely to export nearly one-fifth less cotton than previously estimated as pink bollworms are adversely affecting output which was expected to hit a record.

Lower exports from the world's biggest producer will help its rivals like the US, Brazil and Australia to raise their exports to Asian buyers like Pakistan, China and Bangladesh. "This year exportable surplus will be around 6 million bales. Production estimates are revised down due to the pest attack," said Nayan Mirani, a partner at Khimji Visram & Sons, a leading cotton exporter.

Earlier, industry officials were estimating exports of 7.5 million bales of 150 kg each. A 19% jump in the area planted for cotton prompted industry officials to estimate record production of 40 million bales in the 2017/2018 season starting on 1 October.

But farmers found that as harvesting started fields were infested with pink bollworms which consume the cotton fibre and seeds inside the boll, or fruit, of the plant. The problem was especially widespread in the western Indian state of Maharashtra, the country's biggest cotton grower.

"In many regions the pest attack was severe. We now think production would be around 37.5 million bales," said Chirag Patel, chief executive at Jaydeep Cotton Fibers Pvt Ltd.

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The bollworm infestation has occurred even as Indian farmers have adopted genetically-modified seeds known as Bt cotton that are resistant to the pest. The government approved the seed in 2006. The technology transformed India into the world's second largest exporter of the fibre. However, pink bollworms are now developing resistance to the technology, said V. N. Waghmare, director of Central Institute for Cotton Research.

Extent of damage to be clearer in few weeks

Following low arrivals, with falling yield due to pest attack, the cotton crop is set to fall significantly, say observers. Clarity is expected in a few weeks on the extent of damage the pink bollworm has done to the standing crop, especially in Maharashtra and Telangana. This had also happened last year in Gujarat and three years earlier in Haryana. Its gravity is higher this year; in disease-prone districts, farmers are selling damaged crop at 10-15% less.

Usually, from November onward, daily arrival historically averaged 200,000 bales a day; this time, they are 30% lower. Lower yield, crop damage and farmers being tempted to hold their crop to sell later at higher prices, where crop and quality are better, are considered the reasons.

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This year, several districts in Maharashtra, Telangana and in Tamil Nadu and Karnataka have been hit. Gujarat had already declared a bonus of Rs 500 a quintal above the Minimum Support Price (MSP) for cotton farmers. "We are ready for procurement (at the MSP)," said P Alli Rani, chairman of the government-run Cotton Corporation of India. The market estimates the season's procurement will be 2-3 million bales. However, CCI would not be able to procure cotton with moisture content and quality below the prescribed norm. Hence, in Maharashtra, representations have been made to the state government, which is considering how to help affected growers. The state government might ask its Agriculture Marketing Federation to be aggressive in supporting farmers, said sources.

Maharashtra and Andhra together produce 40% of the total crop.

With lower arrival and possibility of downward revision of crop estimates, the market is turning bullish on prices. Anuj Gupta at Angel Broking said, "We are expecting the price to go up in the near term to Rs 19,500 to Rs 20,000 (a bale). Currently, prices in MCX futures are Rs 18,550. The total crop size is high but the yield is poor."      

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