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USDA revises down India's Cotton output forecast
Commodity Online | December 07 2017
UPDATED 14:32:10 IST

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United States Department of Agriculture's (USDA) foreign affairs agency Foreign Agricultural Service (FAS) has revised down India's Cotton production forecast to 29.8 million 480 lb. bales (38.16 million 170 kg. bales/6.5 mmt) on acreage of 12.3 million hectares. The forecast is 200,000 480 lb. bales lower than USDA official estimate.

The recent untimely rains and pest infestation issues in Telangana and Andhra Pradesh suggest lowering production. The all India yield is expected to be around 528 kg per hectare.

Post travel to northern Telangana in late November indicates farmers are now harvesting the second picking. With first pickings over, farmers are not rushing to the market to deliver seed cotton due to low market prices.

Seed Cotton prices in the wholesale market yards in Telangana are staying close to minimum support price (MSP) rates. However, much of the Cotton is discounted due to poor quality issues like discoloration and high moisture content.

FAS forecasts MY 2017/18 exports at 4.3 million 480 lb. bales (5.5 million 170 kg bales/ 936,000 mt) which is lower than the USDA official forecast as Indian Cotton will need to compete with Cotton from other major exporters.

While Indian Ex-gin prices have fallen by 4-5 percent since the beginning of MY 2017/18 with expectation of a large crop, and are lower than Cotlook A-Index (FE) making Indian Cotton prices competitive, Indian cotton may not be competitive on technical or quality parameters that affect its export prospects.

Bangladesh remained the top Cotton export destination, followed by Vietnam, Taiwan and China. Preliminary Cotton yarn export data shows signs of improvement in September and October as strong demand was observed from China, followed by Bangladesh, Pakistan and Egypt.

India's MY 2017/18 import forecast at 1.5 million 480 lb. bales (1.9 million 170 kg bales/ 326,600 mt). This is 100,000 480 lb. bales higher than the USDA official forecast. Even though a large crop is expected, imports will remain strong as mills import for processing and re-export to cover export commitments, FAS said.


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