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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

07 November 2013

USDA GAIN: India Cotton and Products Update October 2013USDA GAIN: India Cotton and Products Update October 2013

The estimate of India’s 2013/14 cotton production is unchanged at a record 29 million 480 lb bales (37.2 million 170 kg bales/6.3 mmt). Heavy rains and storms over the past few months across key growing areas have tempered optimism about the potential for a higher crop. Mill consumption remains strong and set a monthly record in August. Trade estimates are largely unchanged and cotton prices have started to drop, improving prospects for the current export estimate of 7.0 million 480 lb bales. The Government of India has announced an online reporting system to improve cotton data collection.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Area and Production

In the latest cotton update, IN3108, FAS Mumbai reduced the 2013/14 production estimate to 28.6 million 480 lb bales due to heavy rains across western and central India. However, recent light rains and adequate sunshine across western and central India suggest that this reduction was likely premature. The net effect of September and October rains, storms, and favorable conditions discussed below is no change in India’s 2013/14 cotton production estimate of 29 million 480 lb bales (37.2 million 170 kg bales/6.3 mmt). The state-level discussion that follows is based on changes from the state-level estimates reported in IN3108.

India’s cotton crop was threatened again by heavy rains during October when the major-growing state of Andhra Pradesh was hit by cyclone Phailin. The cyclone brought sporadic rains in northern and coastal Andhra Pradesh and the minor cotton-producing state of Orissa. Winds from the cyclone appear to have skirted major cotton growing areas. However, heavy rains a week or so following the cyclone fell just as the crop was ready for picking in parts of north and coastal Andhra Pradesh. Government of India rainfall data indicates that rainfall amounts in parts of Andhra Pradesh were more than twice the normal level ranging from 10 to 15 inches during October. Production in Andhra Pradesh is estimated 200,000 170 kg bales (156,000 480 lb bales/34,000 mt) lower at 6.3 million 170 kg bales (4.9 million 480 lb bales /1.0 mmt). Crop damage assessment in the state and trade continues and may confirm additional losses. Cyclones are common in the Bay of Bengal during this time of year and often have some effect on cotton yields in Andhra Pradesh.

In Gujarat, heavy rains in September have been followed by light rains and clear weather especially in the Saurashtra and Kutch region providing good maturation conditions and the possibility of stronger second and third pickings. Production in Gujarat is forecast 500,000 170 kg bales (390,000 480 lb bales /85,000 mt) higher at 11.0 million 170 kg bales (8.5 million 480 lb bales /1.87 mmt). In the southern states of Karnataka and Tamil Nadu, slight increases in yield have also been made due to adequate rainfall and moisture availability.

The Cotton Advisory Board (CAB), which is comprised of public and private sector experts, is expected to meet on November 1, 2013; this will be the first meeting of the CAB in several months and will likely result in the first official estimate of the 2013/14 harvest. Based on the monthly cotton stock position (see Table 6), it appears that ending stock estimates were negative as of September 30, the end of India’s local marketing year. Consequently, it is possible that the CAB will either increase its estimate of 2012/13 production or make other adjustments to the official supply and demand estimates to increase supply. In 2012, the CAB made an adjustment to stock levels to augment supply.

On October 18, the Ministry of Agriculture indicated that area planted to cotton had reached 11.5 million hectares compared to 11.7 million hectares a year ago. With some planting still expected in southern India, planted area is estimated at 11.7 million hectares. The “normal” sowing area for this time of year is 11.55 million hectares.


On October 20, 2013, cotton arrivals for MY 2013/14 had reached 549,000 170 kg bales (429,000 480 lb bales/93,000 mt) compared to 547,000 170 kg bales (427,000 480 lb bales / 93,000 mt) a year ago. The pace of daily cotton arrivals is relatively light at 35,000 170 kg bales per day. The onset of arrivals in 2012/13 was delayed due to a delay in planting. This year, late season rains have slowed crop maturation and hampered the pace of early arrivals.

As of October 30, the Cotton Corporation of India (CCI) had sold 2.2 million 170 kg bales of the 2.3 million 170 kg bales it procured in 2012/13 and is expected to continue to liquidate the remaining 100,000 170 kg bales. Cotton prices have been relatively high and CCI has been able to recoup the cost of its 2012/13 procurement operations.


Consumption for MY 2013/14 is estimated at 29.5 million 170 kg bales (23 million 480 lb bales/ 5.0 mmt). The consumption figure for August reached a monthly record of 2.4 million 170 kg bales and spinning margins have strengthened of late as cotton prices decline, see Figure 1a. Many mills are covered through mid-November, but will be seeking new crop supplies in earnest shortly thereafter. Spinners continue to produce yarn to meet strong Chinese demand and growing domestic demand. The rupee was exceptionally weak relative to the dollar over the past few months, but has regained 8.5 percent of its value since early September. The effects of a stronger rupee could be offset in India by higher spinning margins, giving spinners more flexibility in their export pricing, thereby supporting continued strong yarn exports over at least the next few months.

Consumption for MY 2012/13 according to the Textile Commissioner was 29 million 170 kg bales (22.7 million 480 lb bales /4.9 mmt) based on preliminary final estimates. Consumption has been averaging over two million 170 kg bales per month since December 2011.


The MY 2013/14 export estimate is unchanged at 9.0 million 170 kg bales (7 million 480 lb bales /1.5 mmt). Indian prices have been high relative to international prices over the past few months, but have begun to drop as the pace of arrivals increases. Demand from China has also been weak. As reported previously, much will depend on China’s cotton policies. However, if India resumes its position as one of the more competitively-priced cotton origins, we expect that, to the extent that there is demand, the pace of exports will accelerate. For MY 2012/13, India’s cotton exports were 9.9 million 170 kg bales (7.7 million 480 lb bales/1.6 mmt) based on official data.

Cotton imports were 1.2 million 480 lb bales in 2012/13 based on final official import data. Indian mills continue to source cotton from primarily African origins to augment domestic supplies towards the end of the local marketing year.

Trade Policy

India’s Textile Ministry had proposed the imposition of a 10 percent export duty on cotton exports determined to be surplus based on the estimated supply and demand of cotton during 2013/14. Recently, a group of ministries involved in the oversight and regulation of the cotton and textile industries determined that exports should be allowed without restriction (known as Open General License or OGL in India) during the current marketing year. As it has in the past, the Government of India is expected to closely monitor the pace of cotton exports to ensure that supplies are adequate to meet the needs of both the export and domestic markets.

Domestic Policy

2012/13 is likely to be the second consecutive year for which the CAB will likely have to adjust its estimates to enhance supply due to low or negative estimated ending stocks. The Government of India is working to improve cotton data collection and has issued several notices over the past year concerning mandatory reporting requirements. The most recent announcement aimed at enhancing data collection relates to the establishment of a mandatory online reporting system for ginners and others in the cotton trade. It is not clear if or when this data will be available for public use, but FAS Mumbai will be following this process over the next few months. 

November 2013

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