India consolidates its position as 2nd biggest cotton grower

Chennai: For the second year in succession, India will be second-
largest producer, user and exporter of cotton. Last season (August
2006 –July 2007), India had overtaken the US to emerge as second-
largest producer of cotton, after China. And if one goes by the
projection of Cotlook, India is likely to be the number two for the
third year the next season.

This season, with US cotton growers shifting to other crops such as
corn, India has emerged as a firm number 2 producer of the natural
fibre. Last year, India produced 4.746 million tonnes (279 lakh bales
of 170 kg), while the US production was 4.7 million tonnes (mt). This
year, the Indian production has been pegged at 5.34 mt (313.76 lakh
bales) against the US output of 4.14 mt.

According to Cotlook's estimates, production next season is likely to
be 330 lakh bales or 5.61 mt in India, whilst that of the US is seen
declining further to 3.19 mt.

better prices

Indian production (see Table) is seen up in view of better prices for
growers during the last couple of years and increasing use of Bt
cotton, which now makes up over 65 per cent of the total area under
cotton. Production in the US and other growing countries, on the other
hand, is estimated lower in view growers shifting to soyabeans, corn
and wheat.

China continues to be the number one in production, consumption and
imports. This is despite a fall of over one lakh tonnes in production
from last year. Beijing is estimated to produce 7.62 mt cotton this
season against last year's 7.72 mt. Cotlook sees production rebounding
to 7.65 mt next season.

On the exports front, shipments from the country this year are
projected at 1.33 mt (78 lakh bales) against 1.09 mt (59 lakh bales).
The US continues to be the largest exporter, shipping out 3.15 mt
cotton (2.83 mt).

China and India clearly lead the pack on the consumption front. In
fact, higher consumption by China sees it being the top importer
despite being the largest producer. Imports by China are seen at 2.72
mt against 2.30 mt last year. In fact, Pakistan has emerged as the
third largest cotton importer after Turkey. It will import 0.71 mt
cotton against 0.5 mt last season.

consumption

China's cotton consumption, on the other hand, is projected to
increase to 11.54 mt against 10.88 mt last year. Indian consumption is
seen at 3.94 mt, the same as last year.

The ending or carryover stocks this season are seen topping 1.75 mt
(100 lakh bales) against 1.63 mt (90 lakh bales). In contrast, the
ending stocks are estimated lower in China at 3.62 mt (4.07 mt last
season) and the US at 2.04 mt (2.06 mt).

Despite higher ending stocks in the country, there should be no cause
for worry since global ending stocks are projected lower at 12.88 mt
(13.32 mt).

In fact, Cotlook has pruned its cotton production estimates for
2008-09 season by 0.357 mt. This is because production in China is now
estimated at 7.65 mt against 7.75 mt, while in the US, it is seen at
3.12 mt against 3.197 mt.

In view of the pruning, global production is projected at 26.31 mt
against 26.42 mt made last month. The output, however, is likely to be
higher than this season's 26.03 mt.

Cotlook said the global sub-prime crisis continued to take toll on
consumption prospects. But the net drawdown from the stocks was likely
to be higher and over one mt of cotton would be wiped off the global
balance sheet in view of the pruned estimated.

The agency sees India's consumption rising to 7.31 mt against 7.13 mt
this season.

Meanwhile, the US Department of Agriculture said consumption this
season was seen up 1.4 per cent globally.

It said use by spinning mills in China, India, Pakistan and Turkey had
increased sharply over the years.