Wednesday, the U.S. Department of Agriculture Foreign Agricultural Service Agricultural Counselor release of the report, India’s 2008/09 cotton production forecast for 24,000,000 package. The Government of India (GOI) to different species of minimum support price of seed cotton last year to improve on the basis of 28-46%. Due to weak demand for cotton consumption reduction package worth 17,500,000, down from exports of 5,100,000 bags, because the international market prices.

Production

India 2008/09 cotton production forecast for 24,000,000 package.

According to the Ministry of Agriculture’s latest assessment of the acreage, the area under cultivation in 2008/09 from 9,100,000 ha to 9,340,000 ha. However, the yield is expected to drop due to the central states delayed planting of cotton, cotton growth during the bad weather. Cotton Advisory Committee will convene a meeting in December, to re-examine for the first time on the 2008/09 annual output of 15,100,000 package to make (32,200,000 package India) forecast. The last meeting in October 16, 2008 to convene.

Our initial assessment is that the Ministry of Agriculture, 2008/09 BT cotton cultivation area of 6,810,000 hectares, compared to 6,330,000 hectares last year.

The Government significantly increased the minimum support price, but cotton prices

Every market in the early years, the Government of India to determine the minimum support price of seed cotton, the price determined in accordance with the purchase of seed cotton farmers. Cotton Corporation of India (CCI) is the government body responsible for the acquisition in accordance with the states to support the price of cotton. In some cases, the National Union of agricultural marketing and marketing alliances also help the country implement the CCI minimum support price of the acquisition. September, the Government announced that the different varieties of seed cotton to increase the minimum support price of 26-46%.

Global commodity markets chaos, the international cotton price slump. India’s domestic cotton prices fell from the beginning of 2008/09, due to weak international prices and sluggish demand. At present, most of the varieties in the price of 56-63 cents per pound higher than in September to reduce the price of 18-26%. December / January to increase the volume to the market, the price is expected to continue to decline.

The minimum support price of the acquisition volume

Due to the minimum support price of cotton to raise their prices, CCI and the national marketing alliance in accordance with the present minimum support price of seed cotton to buy most of the market. As of November 21, 2008, the total cotton market arrival of about 3,700,000 packages, CCI to buy about 1.27 million package. Farmers below the minimum support price of cotton sold to the private sector to meet their much-needed cash. In fact, most of the cotton market has been in accordance with the CCI to acquire the minimum support price, at present, the daily arrival of about 148-150000 package, of which 80% of the warehouse into the CCI.

CCI government and other countries in accordance with the marketing alliance in support of the minimum purchase price of 780-940 million bales of cotton this year. Market participants estimated that if they ton to 28,500 rupees to buy seed cotton Shankar-6, this year’s cotton prices will cause them to lose about 15-18%.

In 2009 due to be held next general election, the Government and the CCI will be under tremendous pressure to support the minimum purchase price of cotton. Cotton processors, and the local cotton textile mill in asking the Government to reduce the minimum support price, but due to domestic political pressure, it is not possible to amend the minimum support price. The Government is considering the acquisition of CCI for the provision of seed cotton 150,000,000,000 rupees (31.3 million) of funds, in accordance with the minimum asking them to support the purchase price of cotton.