India is facing a crisis in agriculture production as
the monsoon falls below normal. The problem is
most advanced in the key cotton growing regions of
Gujarat, Saurashtra, and Kutch, where rainfall has been
extremely limited. Both regions are experiencing greater
drought conditions due to a record dry period prior to
the monsoon that depleted water supplies. A cyclone
brought earlier rains to Gujarat, which brought about the
start of planting. As of July 18th, 2,143,793 hectares had
been planted in the state, which is above normal. Since
most of the acreage has been planted, rainfall has been
very light. Gujarat is the first or second largest cotton
producing state in India, with the highest yields and the
most advance farming. Last season a drought impacted
yields and production, and the drought has continued.
July was the hottest in four years. The Dharoi Dam is
dry. In the reservoir catchment area of the dam the water
level has dropped to the point that a temple covered
by the water is now visible for the first time in 41 years.
Monsoon rains in the Saurashtra and Kutch areas are
64% below normal, which is the greatest deficit in all of
India. These conditions are making it likely that Gujarat
yields will again fall short in 2019/2020.

The monsoon is presently at a deficit in 12 of the 17
cotton districts. In Maharashtra, which has the largest
cotton acreage, the monsoon is 4% above normal. In
the Madhya Maharashtra district, however, it is 36%
below normal in the Marathwada district and 38% below
normal in the Vidarbha district. Cotton production is
divided between these three districts. In Telangana, it
is 38% below normal. Recent rains have allowed the
monsoon to erase part of the deficit in the Northern
Zone, but western Rajasthan has experienced a monsoon
47% below normal, while it’s 2% above in the eastern
district.

Overall, the crop is late, which means movement, at
best, will occur 60-90 days later than normal, thus
requiring more imported cotton. There is potential that
the 2019/2020 crop will repeat the production levels of
2018/2019, and fall to 30-31 million bales. Even that level
will depend on improved rainfall before the monsoon
departs. The Cotton Association of India has lowered its
estimated of the 2018/2019 crop to 31.2 million 170-
kg bales, which is a 300,000 bale reduction. It has also
raised imports to a record 3.1 million bales and lowered
ending stocks to a record low of 1.5 million bales.

Indian mills have continued to purchase additional US
and African Franc Zone styles. We expect this import
demand to continue into the fourth quarter of 2019,
which is offering one of the few bright spots to world
trade. For Indian mills, the imports are a lifeline at a
time when domestic cotton prices even today are at

81-82 cents ex gin, which has reduced their competitive
position. It has also provided an opening for increased
man-made fiber use at a time when cotton use should
be expanding. US brands and retailers are increasingly
switching orders to India.