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Farmers likely to shift towards more profitable crops
 
 
Munawar Hasan
Sunday, March 03, 2013
From Print Edition
 
 

 

ARLINGTON, VIRGINIA: Global cotton production for 2013-14 is projected at 115.5 million bales of 218kg each, down by three percent as compared to the last fiscal year as relatively lower cotton market prices are expected to cause a shift in cultivated area from cotton to more profitable alternatives, according to the USDA’s Agricultural Outlook 2013.

 

The US Department of Agriculture’s first global 2013-14 cotton projections anticipate output contracting in the United States, China, and Australia, which together account for 44 percent of world production, compared with a 46 percent share in the previous year.

 

Comparatively, Pakistan, Brazil and India are projected to increase production in 2013/14. Total harvested area for cotton in the world is projected to decline nearly three percent from a year earlier to about 33 million hectares, while yields are expected to remain about even to those in 2012/13.

 

Pakistan’s cotton production is projected to increase four percent to 10 million bales. The projected increase in output is mainly due to a yield rebound. Pakistan’s harvested area is projected at three million hectares, unchanged from the preceding year.

 

According to the report, Pakistan’s 2012/13 area harvested is estimated at three million hectares, unchanged from a year ago, while yield is estimated at 697 kg/hectare, down nine percent from the previous year.

 

China, the world’s top cotton grower, is projected to produce 33 million bales in 2013/14, down three percent or 1.0 million bales from a year ago. Despite the government’s generous cotton price support program, cotton growers in eastern China face rising production costs, especially for labor, and are expected to shift production to less labor-intensive and more profitable alternatives.

 

However, planted area in the high-yielding Xinjiang Autonomous Region continues to expand, raising the national yield and partially offsetting reductions in the eastern provinces.

 

China’s harvested area is projected at five million hectares, a five-percent reduction from the previous year. Australia’s production is projected to decline 17 percent from a year ago to 3.5 million bales due to a weaker market price for cotton and decreasing reservoir supplies for irrigation. Australia’s area harvested is projected at 375,000 hectares, down 16 percent from a year earlier and the lowest in four years.

 

The report further said Brazil crop is projected at 7.5 million bales, up one million from the previous year, as continued investment in cotton infrastructure and lower prices for competing crops support cotton production.

 

Brazil production is estimated at 6.5 million bales, down 25 percent from the previous year, as sharply higher prices for soybeans and corn reduced cotton area from the record levels of 2010/11 and 2011/12. Brazil—the top producer in the southern hemisphere—is expected to harvest an area of one million hectares in 2012/13, down 29 percent from a year ago. Brazil’s 2012/13 yield is estimated at 1,415 kg/hectare, up nearly five percent from the previous year.

 

India, the world’s second largest cotton grower, is projected to produce 26 million bales in 2013/14, a two-percent increase from the previous year. While planted area is expected to decline slightly, recovery in yields from 2012 is expected to support production.

 

The outlook anticipates that despite lower production and higher consumption, world stocks will rise for the fourth consecutive season. Global cotton production fell and consumption recovered during the current season, but China added more than 12 million bales to ending stocks as a result of setting domestic price support well above world market-clearing levels.

 

China’s policies have driven world cotton market developments in 2012/13 and will continue to do so for the foreseeable future. Since China’s leadership has not indicated that changes are being considered, USDA is basing this preliminary outlook on a continuation of the policies affecting support prices, import levels, and release of the state reserve as of mid-February 2013.

 

The US crop is projected to fall sharply to about 14 million bales in 2013/14, accounting for most of the expected decline in world production, as producers shift area to corn and soybeans following the historic mid-western drought of summer 2012. Accordingly, US cotton stocks, which are estimated to rise in 2012/13, are expected to tighten again.

 

As far as outgoing year is concerned, global cotton production is estimated to decline four percent from the previous year to 119 million bales. The estimated crop decline is the result of reductions in the major southern hemisphere producing countries and India partially offset by increases for the United States and China.

 

World area harvested is estimated at 34.1 million hectares, down four percent from the preceding year, while the world average yield is about unchanged at 759 kg/hectare. China is the world’s largest cotton producer, with an estimated crop of 34 million bales, up three percent from the preceding year.