production beat expectations this season, but looks like falling further than
had been thought in 2014-15 – although much will depend on the monsoon, which
was forecast on Monday to come in below normal.
Output in the
second-ranked cotton producing country hit 30.5m bales, the US Department of
Agriculture bureau in New Delhi said.
That is 1.0m bales
higher than the department's official estimate, and means India beat by an even
bigger margin its previous record harvest, the 29.0m bales produced in 2011-12.
production appears to be a reflection of timely and well-distributed rains
during the 2013 monsoon, especially across the major cotton producing states of
Maharashtra and Gujarat," the USDA bureau said, citing weakening prices as
evidence of the output upgrade.
cotton prices have continually declined since January (see Figure 1b), despite
robust domestic mill consumption and strong export shipments, lending support
to the notion that supplies are larger than originally predicted."
In fact, exports
look like hitting 9.20m bales, some 400,000 bales more than the USDA itself has
forecast, second only to the 11.08m bales in 2011-12.
The bureau, noting
a "strong pace of shipments", said that exports had reached 429,000
bales, equivalent to 93,500 tonnes, last month alone, with China the top buyer,
and Bangladesh and Vietnam consumers also making strong purchases.
However, the bureau
was more downbeat on prospects for 2014-15, estimating production at 28.0m
bales, 500,000 bales below the official USDA estimate.
The bureau, which
noted that sowings were preceding at an "average" pace, in line with
that last year, gave no reason for its forecast.
Much will depend on
the progress of the monsoon, over which there have been concerns because of the
likelihood of an El Nino weather pattern, linked to dryness in much of Asia
including India, setting in this year.
In 2009, during the
last El Nino, India suffered its weakest monsoon in more than 30 years, with
rainfall 22% below normal.
In fact, Earth Sciences Minister Jitendra Singh on Monday said that monsoon
rains would be below normal this year.
"The monthly rainfall over the country as a whole is likely to be
93% of the average in July and 96 percent of the average during August," Mr
In the north west of India, including Punjab, Rajasthan, Uttar Pradesh,
major areas for growing cotton as well as rice and sugar cane, rains will be
85% of the long-period average.
The monsoon had already been raising concerns over its slow progress,
and was viewed last week as running some five days behind normal, although
progress in Kerala is believed to have picked up pace over the weekend.
The USDA bureau
also flagged an extra setback to farmers in a rising rupee, which is curtailing
India's strong export pace.
cotton prices are now higher than the Cotlook A index as the rupee has
strengthened in the last month and reduced the thin margins for the
exporters," it said.
The premium to the
Cotlook A, a benchmark measure of physical prices, "suggests that the
2013-14 export juggernaut will start to wind down".