iGrain India - The article discusses the current cotton market in India, which is experiencing price improvements due to expectations of a decline in domestic cotton production. Here's a breakdown of the key points:
Decline in Domestic Production: Cotton production in India is expected to drop by 7.4% in the current marketing season, reaching 302 lakh bales (each bale weighing 170 kg), compared to last year. This reduction is attributed to several factors, including a decrease in the sowing area and damage caused by floods and rains in various regions.
Sowing Area Reduction: The sowing area for cotton has decreased by 9%, from 126.90 lakh hectares in the 2023-24 season to 112.70 lakh hectares this year. This decline has been observed across major cotton-producing states, including Gujarat, Maharashtra, Telangana, Madhya Pradesh, Andhra Pradesh, Rajasthan, Haryana, and Punjab.
Price Increase: Due to the expected reduction in cotton production, cotton prices have risen by 0.68%, reaching Rs 56,200 per candy (356 kg). This price rise is also influenced by the reduced supply of cotton and growing demand.
Imports and Global Production: India's cotton imports are expected to rise from 17.50 lakh bales in the previous season to 25 lakh bales this season due to the domestic production shortfall. On the global scale, the US Department of Agriculture has raised its global cotton production estimate by 2 lakh bales, expecting increases in countries like China, Brazil, and Argentina, while production estimates for India, the US, and Spain have been revised downwards.
Government Support and MSP: The Cotton Corporation of India (CCI) is actively purchasing cotton from farmers at the minimum support price (MSP). For long-staple cotton, the MSP has been set at Rs 7,521 per quintal.
This combination of factors, including reduced domestic production, weather-related damages, and the global cotton production outlook, has led to a more favorable pricing environment for cotton in India, sparking investor interest and supporting farmer income through government procurement initiatives.