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Production seen climbing by more than 15% from year earlier
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Government urged to give incentives to encourage exports
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Cotton output in India, the world’s biggest producer, is set to surge after the heaviest monsoon rain in a quarter century, adding to global supply at a time when prices are near their weakest in more than three years.
“The distribution of rain has been good and that will improve yields,” said Kotak, who has about 30 years experience in the industry. Damage from excess rain in some areas will be offset by higher yields, he said in a phone interview.
India has just enjoyed its best monsoon in 25 years. In Gujarat, the top producing state, rainfall was more than 40% higher than the long-term average from June to September, while in Maharashtra, the second-largest, rain was 30% above normal. Planted area also increased to 12.77 million hectares from 12.1 million a year earlier, farm ministry data show as of Sept. 27.
The country’s cotton exports may climb to 5 million bales this year from 4.4 million bales in 2018-19, Kotak said. Sales to China could advance to as much as 1.5 million bales from 1.2 million a year earlier, he said. India is facing increased competition in almost all markets and the government should provide some incentives to make exports attractive, he added.
Traders have so far contracted to ship about 100,000 bales from the new crop, compared with 500,000 bales to 600,000 bales a year earlier, he said.
Source: Bloomberg