India may turn into an importer of Cotton if the domestic textile industry grows by 15-20% a year until the current capacity doubles, says B.K.Mishra, Managing Director Cotton Corporation of India. However he ruled out the possibility of the same happening over a year or two.

Mechanisation of farm holdings in India and employing machines to pick cotton is not feasible as most holdings are small and owned by individual farmers who may not have the sufficient financial muscle to bring in machines, added Mishra. R.C. Jain, Chairman and Managing Director of TT Limited--an integrated textile company--concurs Mishra’s view, but disagrees that India may turn into an importer. Textiles also include polyesters and there is a shift from cotton to polyesters by customers, R.C. Jain says. “Besides, cotton acreage and productivity is also increasing.” he argues.

As per the Ministry of Agriculture, cotton has been sown on 21.65 lakh hectares of land as on June 17 as compared to 15.42 lakh hectares last year. But cotton supply scenario in India is already constrained. Cotton Advisory Board expects the closing stock to be 27.5 lakh bales by the end of current season which will last only for a little over a month given the average monthly consumption of 22 lakh bales by textile mills in India. Cotton year runs from October to September in India with arrivals beginning only in January. Cotton Corporation of India (CCI) reported 30.2 million bales of cotton arrival as of June 19th, 2011 amounting to mere 4% increase over the last year. For 2009-10, India’s cotton consumption stood at 230 lakh bales which increased to 258 lakh bales in 2010-11.

“The domestic textile industry is one of the largest industries in the country and has witnessed a phenomenal growth in the last two decades in terms of installed spindlage and yarn production. The significant features of this growth include installation of open-end rotors and setting up of export-oriented units. The mushroom growth of spinning industry and its modernization has led to sustained growth in cotton consumption specially during the years when country harvested good crop production.” says Cotton Corporation of India website.

After achieving a sustained growth in cotton consumption during Xth Plan period, domestic cotton consumption in last few years barring 2008-09 has been increasing steadily.

Pulses prices continued to show mixed trend in the physical markets with scattered demand. However, at the consumer end the demand for pulses, particularly chana, has increased because of decreased availability and higher prices of vegetables due to monsoons. International sentiments however continue to remain supportive for pulses with expected decline in acreage under pulses in Canada and US.

Urad prices remained firm on Monday across the country due to increased demand in the local markets. The prices gained Rs 20 – Rs 40 as there was a moderate decrease in arrivals which kept the sentiments firm. The offtake also improved in some of the centers which supported the prices. The prices of urad are expected to remain marginally weak in the range of Rs 3900 – Rs 4250 per quintal, for coming days as summer crop arrivals are expected to further increase in coming days. Overseas arrivals will also arrive soon which will further impact the prices.

Moong prices featured steady to firm trend on Monday due to improved trading interest by traders and millers. It was noticed that the sellers were not willing to lower the quotes and the demand also showed improvement in the markets. The prices of moong are expected to react sideways down in the range of Rs 3450 – Rs 4250 for coming days due to higher production of moong expected across the country as against previous year. Adequate stocks along with better production for moong in the country will contain the future increase in the moong prices.

India’s Agriculture minister Sharad Pawar reiterated his stand of lifting the ban on select commodities like non-basmati rice, sugar and wheat. Speaking to media men here he said it will benefit farmers and also on the fact that the country has surplus stocks and is likely heading to another year of a bumper output. With a record cereal crop estimated in the current year Pawar said there should be an open policy for export and import of agriculture commodities.

India's foodgrain stocks are at an all-time high of 65.47 million metric tons, about two-and-a-half times more than the annual requirement for state welfare programs. Still, the government is cautious on exports due to fear of worsening already high inflation and its plan to enact a law that seeks to expand the supply of subsidized grains. The country is also facing a shortage of storage facilities, with its warehouses already full. Production of farm commodities like sugar, wheat and cotton is expected to exceed local requirements, weakening their local prices as only limited or no exports are allowed.

Pawar said the time is right to immediately allow exports of 1.0 million-1.5 million tons of sugar as global prices have surged due to concerns over the crop in Brazil, the largest producer of the sweetener. India allowed exports of 500,000 tons of sugar in April. Mills have already almost exhausted the quota and want clearance to ship another 1.5 million tons in the marketing year through September. The minister said sugarcane acreage and output in the next marketing year are expected to rise at least 10% as higher local prices earlier in the year have tempted farmers to increase plantings. India, the second-biggest sugar producer, is forecast to produce 24.5 million tons of sugar this year, exceeding its annual requirement of 22.0 million-22.5 million tons.

On cotton, Pawar said the acreage is expected to jump 40% next year starting July 1, and so the government can consider more exports.

Sideways trend was noted in the mandis as moderately weak sentiments continued to prevail amidst reports of higher production and stock in the mandis.

Sowing has started in the growing areas in Andhra Pradesh and the progress is reportedly satisfactory. Good Monsoon progress is also reportedly keeping the sowing activities proper. The area sown would however depend on the market rates and if the falling trend continues, traders expect the sowing area may fall as farmers may shift to other lucrative crops like cotton, soybean etc.

The present 2010-11 crop is expected higher at 65-70 lakh bags vs 48 lakh bags the earlier year. Good stocks and increased selling pressure along with weak demand in the mandis have kept trend weak for the commodity over the last few weeks.  The sowing period is from June-August and harvesting begins in January.

Exports that had remained low are however expected to rise in coming weeks from Europe, US, West Asia and Japan. That could support the falling prices to some extent. Latest reports from Spice Board of India indicates the expected Turmeric exports for the period April-March 2010-11 have fallen by 3% to 49,250 MT in 2010-11 from 50,750 MT in 2009-10 same period.