There Will Be Competition For Cotton Supply Between India And China.

India is the second largest exporter of cotton in the world. Because of declining production, India may become an importing country within 3-4 years, forcing India textile mills to compete with the world's largest cotton importing country, China, for the supply of cotton.

Despite the expansion of the planting area, the cotton yield per unit area in India dropped to about 475 kg / ha, or 38% lower than the global average yield per unit area. Because cotton is generally picked by hand, unlike other major cotton producing countries, such as the United States and Australia, they are all machines.

The planting area is limited, not only because of limited land, weather fluctuation, price fluctuation and other factors, but also because the government encourages farmers to have a variety of grain and reduce the planting area of cash crops, such as cotton, which aims to curb the sharp inflation of grain.

Sunil Khandelwal, chief financial officer of Alok industry, said: "in the next 3-4 years, the situation of India's cotton surplus will disappear. The mills will either import high priced cotton or choose artificial fibers."

According to Khandelwal, India is the largest textile producer in terms of turnover.

By the year September 2012, cotton production in India will reach a record high of about 6 million tons, or 35 million bags, weighing 170 kilos a packet. Thereafter, output will begin to decline.

Global prices may prevent India farmers from raising their sown area, and the supply of cotton from Australia, Brazil and African countries has increased.

This will prompt India to compete with its huge Asian neighbor, China, which is highly dependent on importing cotton from the United States. The United States is the world's largest cotton producer.

The two Asian countries account for 60% of world cotton output.

Last year, cotton was the best performing commodity. This best performance remained until the first quarter of 2011, attracting a lot of speculative interest, reaching its peak in the three quarter of last year, though

Future competition with China

According to the data released by the India government, China is the largest textile exporter in the world, with a global market share of 28.3% last year, or 6.6 times the India share of 4.3%.

The India company and China and other Asian countries, such as Pakistan, Bangladesh and Vietnam, have been fighting hand to hand in textile and clothing exports to Europe and the US market.

If India becomes a net importer of cotton, then the India company will have to compete with Chinese enterprises to compete for the source of cotton.

Khandelwal said: "we have already competed with other Chinese enterprises for other resources, and in the near future, we may compete with them for cotton.

Chinese experts agree with this view that they say China's high-end textile industry will further boost cotton demand.

In 2010/11, cotton consumption in China was about 10 million tons, compared with 6 million 600 thousand tons in the whole year.

Just like in India, China's cotton growing area is competing for food and grain.

By 2015, China's cotton demand is expected to rise to 13 million tons.

A senior Chinese official said in June that China's output was difficult to raise, and its output fell 6.9% to 5 million 960 thousand tons last year.

Chinese officials have not formally set targets for cotton production in 2015.

By the year 2019-2020, the consumption of India's domestic textile industry is expected to reach 7 million 20 thousand tons. Domestic residents' abandonment of polyester and the sharp increase in clothing exports will greatly boost cotton demand.

Raw cotton competition among Asian giants will inevitably stimulate price volatility in the global market.

Ajitesh Mullick, head of Religare's commodity agriculture research division, said: "it is clear that global cotton prices are bullish. However, due to many factors of price dependence, such as the demand of the United States and Europe, the production of natural fibers in other parts of the world, it is difficult to quantify the price rise."

Cotton demand

Because of the high price of last year and encouraging farmers to grow more cotton, India's cotton planting area has expanded as the second largest producer in the world. India's cotton planting area will probably increase by 15% by the end of September 2012.

Another official said that because cotton prices in the cotton season ended in September 2012 were unlikely to hit a record high last year, India's cotton planting area may gradually decline from next year.

In recent 4 years, the annual cotton demand in India has increased by 8.5% to 9%. 2010/11 has increased 25% to 4 million 600 thousand tons compared with 3 million 720 thousand tons in 2005/05.

The annual cotton age in India is from October to September next year.

Between 2005/06 and 2010/11, cotton production in India increased by 31% to 5 million 300 thousand tons, mainly because last year's planting area increased by 26% over the 8 million 700 thousand ha of 2005-06, reaching 11 million hectares.

But increasing planting area does not mean higher productivity.

"In Maharashtra, cotton picking technology is lagging behind, lack of irrigation facilities, and lack of high-quality seeds, which are the main reasons for low productivity," said Usha Barwale Zehr, chief technology officer of Mahyco, a joint venture in India.

Production decline

In 2001/02, India's cotton planting area is 27% of the total area of the world, and its output is only 12% of the world's output, because India's cotton productivity is the lowest.

In 2007-08, the yield doubled as a result of higher quality seeds.

But since then productivity has declined steadily, down 14% from the highest 554 kg per hectare in 2007/08.

In the main cotton growing countries, Australia has the highest yield of 1579 kg per hectare, followed by Brazil and China. The output is 1480 kg per hectare and 1301 kg per hectare respectively.

The reason is that India has picked cotton by hand. Its planting density is about 12000 cotton per hectare. In some parts of China, its planting density is 150000. In Australia, the planting density is 85000.

In addition, the cotton growing areas in India rely on annual monsoon rainfall, resulting in a decrease in yield per unit area.

"Even if productivity increases, India's weather and soil conditions will make India's productivity less than the global average productivity," said D.K. Nair of the Federation of textile industries.