India’s cotton area to hit 3-year high as prices rally

MUMBAI: Cotton planting in India, the world's biggest producer of the fibre, is likely to rise by 15 per cent in the 2017-18 marketing season to a three-year high as farmers switch away from other crops, likely boosting cotton production and exports.

Higher output in India could kill a rally that pushed global cotton prices to their highest in three years this month.

"This year farmers received higher prices, so they are going to raise the area under cotton. We are expecting around a 15pc increase," said Mekala Chockalingam, chairman of the state-run Cotton Corporation of India (CCI), the biggest cotton buyer in the country.

Domestic cotton prices rose 19pc from a year ago to 41,300 rupees ($639) per 356 kg candy, following the rally in overseas prices. A candy is a traditional measure of mass in India. A 15pc rise in crop area would lift India's cotton planting to around 29.9m acres in the marketing year starting on Oct 1, highest since the 2014-15 year.

That compares to 10.5m hectares in the current marketing year, the lowest in seven years.

"We have lost area in the last few years. We will recover that lost area as long as the monsoon is normal," said Nayan Mirani, president of Cotton Association of India.

Most Indian farmers start planting cotton -- a crop that requires lots of moisture -- with the onset of monsoon rains in June, although some with irrigated fields start as early as May.

India looks likely to receive above average monsoon rainfall as concern over the El Nino weather condition has eased, the chief of India's weather office said on Tuesday.

Oilseeds and pulses compete with cotton in key producing areas like the western states of Maharashtra and Gujarat.

Prices of oilseeds and pulses plunged as much as 60pc due to bumper production this year, which will force many of them to switch to cotton, said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt Ltd, a leading exporter.