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ShareWorld prices up; Indian 2007-08 crop at an all-time peak
MUMBAI: If the global cotton situation is less than reassuring, in India, the outlook for this natural fibre has turned positive in the wake of a record harvest while keen export demand has kept the pressure on prices.
Notwithstanding a lower-than-anticipated rise in the offtake of cotton, a setback in production and sustained export demand have kept the prices on the boil in recent months, according to the latest information released by the International Cotton Advisory Committee.
The average price for November 2007 stood at 69.68 US cents per pound for Cotlook A index-a jump of over 12 cents from a year ago. In all the major producing countries--notably the United States and China--harvest setbacks are feared at a time when demand is very robust for this fibre. This hardening trend is likely to persist at least in the near term.
India is happily placed in this context. Helped by good weather during much of the crop season-and also by the extensive use of hybrid seeds including the Bt cotton varieties-cotton crop is expected to scale an all-time peak of 300 lakh bales. This is a very tentative estimate. The brisk pace of market arrivals indicates that the final tally may be even more reassuring.
As of the third week of December 2007, arrivals have topped the 122 lakh bale-mark; while a year ago, the tally was only 100 lakh bales, a gain of 22%.
With large inventories from the preceding season of about 47 lakh bales, the availability of raw cotton is slated to be very comfortable; apart from meeting the mill and ex-mill consumption-and a promising export outlook--the 2007-08 season is likely to end with a comfortable stock position.
But farmers need not worry about a slump in raw cotton prices as export demand has been a factor in buoying up this commodity. Since there are a multiplicity of varieties of cotton-no other country can lay claim to this dubious distinction-an indication of the price movement is furnished by the wholesale index for raw cotton.
During the first week of December 2008, the raw cotton index stood at 179.9 (base period: 1993-94=100), while a month ago, this index was 174.9 and a year ago at 152.1.
Already, contracts for export of cotton of around 55 lakh bales have been entered into and the total volume for the year may be as high as 70 lakh bales as compared to 55 lakh bales last year. With China experiencing a major setback in its production, India may come to that country's rescue this year; it is a major market for our surplus cotton even otherwise.
India had sown this crop in about 92 lakh hectares in 2006-07-the latest year for which reliable figures are available-much of it under hybrids and of late, Bt cotton. With scope for larger coverage a difficult proposition, higher productivity is the only way out to keep up the momentum.
In this, we are well placed in that yield per hectare has shot up to 501 kg last year-up from a mere 278 kg in 2000-01. Since the yield potential is not exhausted, despite area stagnation, the tempo of output can be sustained by tapping more of the transgenic seeds and better farming practices.
