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India on track for higher cotton output, exports in 2013/14

MUMBAI: India, the world's second-largest cotton grower, could increase output in 2013/14 as hefty monsoon this year encourages farmers to plant more acres and extra moisture swells yields, industry experts said.

A higher output could boost India's exports of cotton and yarn to major markets, which include the world's biggest importer, China, as well as Bangladesh, Indonesia and Vietnam.

"Sowing operations have picked up on ample rains. Area under cotton will increase or remain the same as last year. Production would rise because of higher yields," D.K. Nair, secretary general of the Confederation of Indian Textile Industry told Reuters.

India produced 34 million bales of cotton in 2012/13 and experts had been forecasting the area sown with the crop would fall by five percent this year as higher prices for alternative crops such as guar, used in shale gas production, and soybean, swung farmers to plant them instead.

"Soybean has given better returns, whereas cotton is a labour intensive crop and its cost of production is higher. But soil pattern and weather restricts any significant shift in India," said Prerana Desai, vice-president of research at Kotak Commodities.

Spot soybean prices have risen by 50 percent since the beginning of January 2012 compared to nearly 15 percent for cotton.

The area sown with cotton as on June 28 jumped to 5.58 million hectares from 2.81 million hectares in the previous week, data from the agriculture ministry showed. Planted area during the same period last year was 3.14 million hectares.

Soybean had been planted on 4.29 million hectares as against 0.63 million hectares a year ago.

The total area planted with cotton was 11.8 million hectares in 2012/13. Gujarat, Maharashtra and Andhra Pradesh are the top cotton producing states in India.

Traders said a jump in cotton prices around the time of sowing also encouraged farmers to grow cotton on a bigger area.

In the domestic market, the most-traded Shankar-6 variety has risen more than 11 percent since the start of May to 40,500 rupees ($680) per candy of 356 kg each, data from the Cotton Association of India showed, mainly due to a squeeze in supplies as one harvest ends and a pick-up in overseas demand.

In addition, the government raised the base price it promises farmers for cotton medium staple variety to 3,700 rupees a quintal from 3,600 rupees in a bid to encourage farmers to increase sowing. The support prices for soybean (black) was raised by 300 rupees to 2,500 rupees a quintal.

Cotton yield should improve to 520 kilograms per hectare against 490 kilograms a year ago on timely rains, Nair said.

This year's monsoon has drenched the country in record time, almost a month ahead of schedule. Most of the country has had above average rainfall in the June to September season so far.


News Source: moneycontrol.com