Not cotton candy

‘‘Delayed rains at the time of sowing in June in certain areas and recent floods in parts of western India damaged crops to some extent, but the overall condition is good,’’ said a cotton trader in Mumbai. Monsoon showers in early August after a dry spell improved crop prospects. If more rains come at the end of this month, crop yields would get a further boost, traders said.

‘‘Even if the prices fall, the support price mechanism of the government will ensure that the prices will be under check. During the excess production of mustard, the government intervened. Further, the exports will absorb a major chunk of output and ensure a better price,’’ said Madan Sabnavis, chief economist of NCDEX.

India — third largest producer in the world behind the US and China — has the world’s largest area under cotton and this has risen by 5 to 7 per cent in 2005 from about 9 million hectares in 2004. As the bumper production is expected to soften prices, farmers are expected to shift from cotton to other commodities, traders said. What’s more, yields are expected to be better this year with the growing popularity of genetically modified cotton, which was introduced in the country in 2002. Overall coverage under the genetically modified cotton has more than doubled this year from the previous year following the launch of new varieties and improved supply of hybrid seeds.

More exports could be one solution for the problem of plenty. India’s cotton exports could rise to about 1.5-2 million bales in the marketing year to September 2006 to countries such as China, Pakistan, Bangladesh and Indonesia from nearly 1 million this year.

But there are some traders who opine it is too early to predict the bumper output and subsequent price fall. ‘‘All depends on the 250 varieties of cotton in the country which include medium and long fibre cotton. There is still ambiguity over the sowing of genetically modified cotton,’’ said an analyst with a commodity trading firm.

‘‘In northern zone, the acreage and output is increased. Even in Gujarat, acreage of Shankar and BT variety cotton has gone up. But in Maharashtra and Madhya Pradesh, sowing is on. In southern states it will take some time to predict the output. In this scenario, the 25 million bales output may not be the right figure. It may be even 23 or 24,’’ said Ajay Trivedi, a cotton analyst with a Mumbai-based firm.

‘‘It is true that internationally, cotton is in short supply. So the prices will be under check,’’ said a market source. On the other hand, many cotton mills which have planned expansion won’t be able to absorb the bumper crop as there is a time gap between implementation and commissioning of plants.