By Sharon C. Johnson, Analyst, Penson Commodities, Atlanta, Georgia
ChinaΆs weather in the past few weeks has been mixed, with an excess of rain and cool temperatures in the Yangtze River Basin (south/east) whereas the Yellow River Basin (central/north) has been dry but received beneficial moisture recently with a mixture of rain in Xinjiang (far northwest).
Producers there plant cotton during April and May, and reports thus far confirm a sizeable drop in area in many of the eastern provinces. Shandong, Hebei and Henan are in or near the Yellow River and in 2010 ranked in production as numbers 2, 3 and 5, respectively.
Hubei, Anhui, Jiangsu and Hunan are all in or near the Yangtze River and rank 4, 6, 7 and 8, respectively.
Xinjiang produces about 40-45% of the Chinese cotton crop, with the above mentioned Yellow River provinces adding in 29% and Yangtze River another 21% for just over 90% of Chinese cotton production in 2010.
It will be another few weeks before the size of the drop in Chinese cotton area is known, but the 10-15% range being used is accurate, with several sources leaning toward the high side. Production projections are taking shape with Cotlook and the ChinaΆs Academy of Social Sciences both putting forth a figure of 27.5 mln bales or less.
India Weather/Planting – India has a very long planting season, but the northern states (Punjab and Haryana) plant first and then the central and southern states begin. The monsoons are critical to IndiaΆs crops including cotton and, if on schedule, will begin its advancement in late May/early June from south to north and then reverse ending late July into August. IndiaΆs Meteorological Dept will issue its first official monsoon forecast in the upcoming week.
Several early worries should be noted regarding the potential development of El Nino and its negative effect on IndiaΆs monsoon during its withdrawal period. As with China, the lack of interest by producers to plant cotton has mushroomed in the past two months due not only to falling prices but the recent actions of IndiaΆs government in regards to exports.
Whether they are right or not, producers are unhappy with the export ban and higher oilseed prices have caught their interest.
According to the Cotton Association of India, cotton area could be down as much as 15% as discussed in a Bloomberg report from earlier this month. Assuming a near normal yield, production may only decline by 2 mln bales from this yearΆs 26.5 mln bales (USDA Apr supply/demand report) but a poor monsoon could result in a much larger decline.
