Cotton output may fall if dry spell lingers

SO FAR NO CROP DAMAGE SEEN DESPITE INADEQUATE RAINS, BUT THINGS COULD TURN WORSE COUNTRY'S cotton economy is keenly awaiting a fresh spell of rains in the next one week. If there are no rains in next 5-7 days, the cotton production in Gujarat, the top cotton producing state, may drop to 70-75 lakh bales from 93 lakh bales last season.      So far, despite scanty rains, there is no damage done. On the contrary, the acreage under cotton cultivation has risen. With almost 96 lakh hectares already coming under cultivation, cotton has witnessed a reord acreage. Last year, the figure stood at 93.7 lakh hectares. It is estimated if there are further spells, the acreage under cotton cultivation might go up to 98 lakh hectares. The present increase in acreage is mainly in states of Gujarat, Maharashtra, Punjab and Karnataka.      A round or two of rains in Gujarat and Maharashtra, the leading producers of cotton in the country, may again take the cotton production to above 3 crore bales (1 bale is 170 kg) for the forthcoming marketing season, with Gujarat contributing about 1.1 crore bales.      The cotton acreage in Gujarat has gone up to 25.5 lakh hectares, up from 23.5 lakh hectares during last kharif. Farmers have sown the short staple variety during the past few days. In an event of another round of rains, the figure will swell by 20-25,000 hectares. According to sources, about 6.5-7 lakh hectares is already under cultivation of short staple variety of cotton. Maharashtra has 33 lakh hectare under cotton cultivation, against 31.5 lakh hectares in the previous year. Cotton acreage has increased from 12.5 lakh hectares a year ago to 14 lakh hectares in Punjab, while in Karnataka, it has increased from 4 lakh hectares to about 5 lakh hectares.      However, the crop is passing though a critical phase and badly needs more spells of rains. "The output may be low in spite of higher acreage, if it doesn't rain in about a weak," said Dinesh Shah, of Gill and Company, a leading cotton broker in the country. "At present, the crop is showing some signs of deterioration, but absence of rain may lead to heavy losses," he added.      "So far the crop situation is good, but it still needs more rains. Timely and adequate rains may result in production of about 3.2 crore bales in the country and 1.1 crore bales in Gujarat," said Arun Dalal, a cotton broker.      Irregular rains in previous kharif season resulted in decreased acreage, as a result of which the production decreased to 93 lakh bales from 1.17 crore bales in the previous year in Gujarat. "If the situation persists, this could be the lowest output in the past four years," said Sardarbhai Patel of Raghuvir Gining mill.      After the introduction of Bt cotton, Gujarat has witnessed a continuous rise in production with the last year being an exception. Lack of rains has sustained high prices. However, with enough carry forward stock, further rise in prices is unlikely. At present, the spot price is in the range of Rs 22,800-23,000, while the forward contracts for December and January delivery are quoted at Rs 23,500-23,800, say sources.  Peru drops safeguard duty on Indian yarn  MUMBAI: Indian cotton yarn exporters would not have to pay an additional duty for exporting their products to Peru as the South American nation has decided to drop duty on import of cotton yarn. The efforts made by the Cotton Textiles Export Promotion Council (Texprocil) and diplomacy by the Indian embassy have led to the Peruvian authorities deciding not to impose any safeguard duty on import of cotton yarn into that country. Shipments of cotton yarn from India would now continue without any encumbrances. "Being the largest supplier of cotton yarn to Peru, with a share of over 80% in total Peruvian cotton yarn imports, Indian cotton yarn exports would have been severely impacted in case the safeguard duties were imposed," Texprocil chairman VS Velayutham said in a statement here. Exports of cotton yarn from India reached a level of $94.45 million during 2008, recording an impressive growth rate of 73.62%. On account of the safeguard duty, imports of cotton yarn from India during January-June 2009 recorded a sharp decline reaching a level of $24.79 million. It may be recalled that aggrieved by the economic downturn, cotton yarn producers in Peru represented by Sociedad Nacional de Industrias (SNI) filed a complaint with the National Institute for the Defense of Competition and Protection of Intellectual Property, claiming that rising imports of cotton yarn were causing a threat to the domestic cotton yarn producers in Peru.