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World faces cotton glut this year

Cotton prices are likely to witness a depressing trend. There is going to be a lot of cotton the world over. In spite of losses due to the recent hurricanes in the US cotton belt, the size of the US crop is expected to be larger. Indian acreage for the current season is expected to jump about 12 per cent compared to last year. Expecting yield to increase by about the same percentage points, India will have a bumper crop. If this scenario turns out to be correct, it may create a situation that will warrant India to support farmers by minimum support price operations. In the country, 350 lakh bales were produced last season and the number is expected to reach 385 lakh bales.

Among the many factors that have led to an increase in Indian acreage, an important aspect has been the shift from oil seeds and pulses to cotton due to lack of remunerative prices. There has been a stagnancy in prices of these commodities, and MSP has had to be applied for these products. Cotton prices are under pressure as mill demand is not high. To exacerbate this situation, confusion is prevailing with regard to the implementation of GST.