Report Highlights:

• Yields are expected higher through a combination of better crop, pest, and weed management practices and assume a “normal” monsoon after two consecutive years of deficient rain.
• Mill consumption is forecast lower than the 2015/16 marketing year as demand remains weak. Exports are forecast at 5.0 million 480 lb. bales while imports are forecast at 900,000 480 lb. bales.

Production

India’s 2016/17 cotton production is forecast at 28.5 million 480 lb. bales (36.5 million 170 kg bales/6.2 MMT) on 11.8 million harvested hectares. Planting decisions are largely driven by expected price realization, but additional factors such as the relative cost of production of competing crops, water availability, central/state government support (including anticipated minimum support prices (MSP)) and a timely monsoon are crucial factors.

The Post estimate for MY 2015/16 production is increased 500,000 480 lb. bales higher than the USDA estimate to 27.3 million 480 lb. bales (35 million 170 kg bales/ 5.9 MMT). While reported arrivals may be lagging compared to previous years, field travel observations, lower farm-gate prices, higher year-on-year exports, and limited coverage by textile mills indicates larger supplies being held in the supply chain amongst various stakeholders. MY 2014/15 production estimates remain provisional per the Cotton Advisory Board (CAB) at about 29.6 million 480 lb. bales (38 million170 kg bales/6.4 mmt) which is higher than the USDA estimate.

Farmers Mulling Crop Choices

Farmers consistently exhibit strong preference for cotton relative to other crops. However, as the MY 2016/17 planting season approaches, a farmerΆs planting decision whether to expand/contract cotton acreage is difficult as, even though prices of competing crops dropped, soil conditions and yields may favor grains, pulses, and oilseeds.

Assuming a normal monsoon, the nationwide yield for MY 2016/17 is forecast at 526 kg per hectare. This is higher than the MY 2015/16 estimated yield of 502 kg per hectare when significant pest pressures across various states and prolonged warmer and drier temperatures affected plants. IndiaΆs cotton yields remain significantly lower than the global average of 800 kg per hectare; a difference attributed largely to the relatively low plant populations that farmers seed in order to create rows that are wide enough for bullocks and workers to traverse.

Industry experts believe the advent of biotech cotton has improved the predictability and stability of cotton as a crop which has supported the expansion of cotton area in recent years. Post estimates minimal acreage changes in the short-term, but area may decrease over the long-term as rising food demand and government efforts to encourage food crop production should prompt farmers to shift to other crops.

Sources suggest the only reason to maintain cotton acreage would be to shift away from viewing the plant for its fiber and, instead, viewing it for its protein, oil, and feed (hull) use. Several central government agencies and research institutes state that increasing cotton productivity needs to be emphasized. Various production systems, such as a high density planting system (HDPS) with short duration varieties, intercropping with legumes, and mechanical picking under rain-fed conditions have been undertaken in various states on a trial basis as a means of support farmer income diversification.

Click here to read more of India Cotton and Products Annual 2017 Production Forecast.