Exactly when a study by Gherzi, a Zurich-based consultancy agency, has suggested that India’s competitiveness in the cotton textile sector had improved over the last decade against six rivals including China, Bangladesh and Thailand, the latest US Department of Agriculture (USDA) report points out that cotton exports from India have dropped by as much as 36 per cent to 9.14 million bales in the current marketing year’s first 11 months, ended June.

The cotton-marketing year runs from August to July. While the first report dwelt on the cotton textile sector and India’s increased competitiveness in areas like technology up-gradation and manufacturing costs and exports, the second talks about raw cotton.

The USDA’s preliminary estimates say cotton exports from India reached 9.1 million bales (one bale contains 170 kg of cotton) by end-June against 13.91 million bales in the August-June period of the 2011-12 marketing year. Around more or less the same time, another report, this one by the Organisation for Economic Co-operation and Development- Food and Agriculture Organisation (OECD-FAO), projected that India would replace China as the world's largest cotton producer by 2022 propelled by a higher output growth over the next decade.

This report said while China’s cotton production was expected to decline 17 per cent, India’s would go up by 25 per cent, making India the world’s largest producer of cotton. The report attributed this projected rise in production to increasing yields.

However, the growth rate of yield would be slower compared to the previous decade.

Significantly, cotton production in India, according to union agriculture ministry statistics, stood at 338 lakh bales in the 2012-13 crop year (July-June), which is marginally lower than the last year’s level of 353.75 lakh bales (Cotton Association of India figures).

Despite this marginal fall, production is expected to move up. Not just production, according to most studies, consumption too is expected to grow more in India than in any other country. As and when India replaces China as the largest cotton producer and emerges more competitive in cotton textile sector, the consumption will grow further.

One issue that keeps surfacing in the cotton sector is that of hoarding by a section of large traders, which in turn sends cotton prices up. Different stakeholders in the cotton sector keep taking up the issue with the centre, seeking release of stock by the Cotton Corporation of India to domestic mills. The Cotton Association of India, however, thinks that the rise in cotton prices in India in most cases is a reaction to higher cotton prices in the international market. If the price gap between international and domestic cotton narrows, that’s a good sign and that’s in the interest of the farmers, the CAI feels.

When there is good sowing activity and favourable weather, prices fall. Analysts and traders say sowing activity across the country’s cotton producing regions, including Gujarat, is now good. The weather too is behaving nicely. This may bring cotton prices down in the coming weeks.