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Shifting Crop Patterns Impact India's Cotton: USDA Forecasts Decline Amidst Rising Export Opportunities

Published 08-04-2024, 01:59 pm
© Reuters.  Shifting Crop Patterns Impact India's Cotton: USDA Forecasts Decline Amidst Rising Export Opportunities
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USDA's FAS anticipates a 2% decline in India's cotton production for 2024-25, attributed to farmers favoring higher-yielding crops like pulses and maize. Despite this, a projected increase in cotton consumption and export recovery signals resilience in the industry. Moreover, improved yield prospects due to expected normal monsoon rains offer a glimmer of hope amidst price fluctuations.

Highlights

Projected Decline in Cotton Production: USDA's FAS predicts a two per cent decline in India's cotton production for 2024-25, estimating it at 25.4 million bales of 480 lb.

Shift in Crop Preferences: Farmers may shift from cotton to crops like pulses, maize, and paddy due to their higher returns, impacting cotton production.

Cotton Sowing Area: The estimated cotton sowing area for 2024-25 is 12.4 million hectares in India.

Improvement in Yield: A normal monsoon season is anticipated to enhance the yield by two per cent to 446 kilograms per hectare in the upcoming season.

Cotton Consumption: India's cotton consumption is projected to be 24.5 million bales of 480 lb, marking a two per cent increase from the previous year.

Export Recovery: Exports of value-added cotton products, especially cotton yarn and fabric, have seen a significant recovery in the first six months of 2023-24, indicating a rebound in mill consumption.

Price Trends: Farmgate prices for seed cotton in March 2024 have improved from the previous month but are nearly six per cent lower than the previous year, potentially impacting farmer decisions.

Export Outlook: Cotton exports for 2024-25 are expected to reach 2.4 million bales of 480 lb, supported by higher carryover stocks and a depreciating rupee.

Import Prediction: Following the revocation of import duty on extra-long staple (ELS) cotton, imports are predicted to be 20 per cent higher at 2.4 million bales of 480 lb.

Conclusion

While India faces a projected decline in cotton production driven by shifting crop preferences, the sector shows resilience through rising consumption and export opportunities. Despite challenges such as fluctuating prices and import dynamics, the anticipation of improved yield and export competitiveness provides a pathway for the cotton industry to navigate through uncertainties and maintain its significance in the global market.

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