Recent price gains make cotton sowing attractive - ICAC
In the first two months of 2015, prices of competing crops like wheat, maize, and soybean all declined while cotton prices held steady.
“The recent gain in cotton price has made sowing of the white gold attractive and may mitigate the loss in area to competing crops,” ICAC said in a press release.
According to ICAC, world cotton area is forecast to decrease 7 per cent to 31.3 million hectares in 2015/16, and world production is projected down 9 per cent to 24 million tons.
Although the price of cotton is less attractive than its competing crops, such as wheat, maize, soy, rice and sugar, compared with a year ago, its position has improved in the last few months.
The record volume of cotton stocks had put downward pressure on international cotton prices, which have averaged around 68-70 cents/lb for much of the season.
Like cotton, prices of competing crops fell in August and September. However, prices for wheat, maize, and soybean recovered in late autumn and winter, while cotton continued to fall, making cotton less attractive.
World production in 2014/15 is estimated at 26.4 million tons, up 1 per cent from the previous season, while world average yield decreased 2 per cent to 791 kg/ha.
In India, acreage grew 5 per cent to 12.3 million hectares in 2014/15, which is the largest area planted with cotton on record.
However, erratic monsoon weather caused India’s average yield to fall 5 per cent to 551 kg/ha, as a result of which, production reached 6.7 million tons, less 20,000 tons than in 203/14.
Harvested area in the US grew 29 per cent to 3.9 million hectares, and production increased 26 per cent to 3.5 million tons and in contrast, acreage in China, Pakistan and Brazil declined in 2014/15.
After reaching 5.5 million hectares in 2011/12, the area under cotton in China has dropped in each of the subsequent seasons and is estimated at 4.3 million hectares in 2014/15, down 8 per cent from 2013/14.
Scarcity of labour, rising production costs, and greater profitability from other crops are which have led to lower to lower planting of cotton in China, due to which its output is estimated at 6.4 million tons in 2014/15.
Although planted area in Pakistan increased slightly from 2013/14 to 2.9 million hectares, flooding in the autumn caused a loss of around 86,000 hectares; however, greatly improved yield is likely to push output to 2.3 million tons.
Farmers in Brazil were discouraged by the sudden drop in international prices in the months before planting, and area in Brazil fell 13 per cent to 976,000 hectares, so production is projected down 11 per cent to just 1.5 million tons.
After falling 1 per cent in 2013/14, world consumption is projected to expand 3 per cent to 24.1 million tons in 2014/15 with domination from growth in Asia.
China’s consumption is expected to recover 5 per cent to 7.9 million tons after several seasons of decline.