India’s cotton output is likely to dip by two million bales to 32.3 million in the 2012-13 marketing year (August-July) as farmers are likely to switch over to better-priced alternative crops amid unclear cotton export policy, according to a USDA report.

India, the world’s second biggest cotton grower, had produced a record 34.25 million bales in the 2011-12 marketing year. One bale contains 170 kg of cotton.

“Cotton production is forecast to decrease by two million bales to 32.3 million bales as the area is expected to drop by 10 per cent,’’ the US Department of Agriculture (USDA) said in its latest report.

But domestic consumption is expected to increase to 26 million bales from 25.3 million bales.

However, India’s exportable cotton supply would be only six million bales in 2012-13 against 11.75 million bales this year, given an expected drop in production and higher domestic demand.

On cotton acreage, the USDA said gauging farmers’ planting intentions at this early stage is difficult. However, several factors suggest that cotton area in 2012-13 will be lower at 10.9 million hectare against the record 12.2 million hectares in 2011-12.

The USDA, however, said that “if the Government of India increases the minimum support price (MSP) for cotton significantly, planting intentions could shift.”

Farmers have a number of planting options, as high prices of peanuts, soyabeans, guar and maize could prompt them to shift away from cotton in central, western and northern India.

According to the report, Indian farmers may decide to try crops that are subject to fewer policy driven market disruptions as it is not clear whether the Government will allow fresh cotton exports before the start of the 2012-13 marketing year or if the government will develop a new procedure for regulating exports.

On March 5, India had banned exports briefly for a week. It has decided to permit exports that were registered before the ban period.

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