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Weak monsoon hits home with India cotton downgrade

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The US Department of Agriculture cut its forecast for India's cotton crop, warning of "significant delays" in sowings, in one of the first concrete of India's weak monsoon lowering crop expectations.

The USDA cut by 0.5m bales to a four-year low of 28.0m bales its estimate for cotton output this year in India, the second-biggest producer of the fibre, which has been forecast by the International Cotton Advisory Council to overtake China to claim the top spot.

The downgrade reflected "reports of significant delays in planting", thanks to the "late start and generally poor distribution" of monsoon rains, which have remained weak after a poor start in June, coming in 43% below the seasonal average.

The USDA also cut to 517 kilogrammes per hectare its forecast for the Indian cotton yield, below the average 530 kilogrammes per hectare.

Sowing delays

"The late start, somewhat erratic beginning and poor distribution of the monsoon rainfall is generally resulting in delayed planting of almost all kharif (monsoon) season crops including cotton," the USDA said.

Official Indian data released separately on Friday showed cotton sowings since the start of the monsoon at 4.52m hectares as of Thursday, half the area a year ago.

Sowings are behind for other crops too, including soybeans, at just 790,000 hectares completed – a 90% slump year on year.

However, while there has been some talk over the threat to Indian crops from the weak monsoon, commentators have so far proved reluctant yet to cut crop forecasts, with the rainy season having a further two months or so to go.

There has been a particular focus in sugar markets, given that India is the second-ranked producer of the sweetener and top consumer, although the official data showed sowings of cane , at 4.60m hectares, only 20,000 hectares behind those last year, in part thanks to irrigation.

'Reduced irrigation availability'

The USDA said that, with India's cotton sowings window open throughout this month, it was still early yet to make many firm assumptions over crop prospects.

"The mid-July planting progress data and observations will be critical in estimating the 2014 cotton area planted."

It also cut estimates for the Brazilian 2014-15 crop, and for production in Australia, downgraded by 400,000 bales to 2.7m bales thanks to dryness there too.

"Lower planted area is anticipated as a result of reduced irrigation availability at sowing, which will commence in September," the USDA said.

"Current [Australian] reservoir levels are 40-70% below last year's levels".

'Lower expected abandonment'

However, the USDA raised its estimate for the domestic cotton crop, by 1.5m bales to 16.5m bales, in part thanks to larger sowings, as highlighted by a June 30 crop plantings report.

The USDA also cited "lower expected abandonment based on favourable precipitation and improved crop conditions".

US cotton stocks at the close of 2014-15 were pegged at 5.20m bales, an upgrade of 900,000 bales, and the highest in six years.

By Agrimoney.com

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