Cotton often referred as "White gold", has been in cultivation in India for more than five thousand years. It is one of the oldest fibers and the time when it was first utilized is not known accurately. It is a soft fiber that grows around the seeds of the cotton plant. The fiber is most often spun into thread and used to make a soft, breathable textile, which is the most widely used natural-fiber cloth in clothing today.
The cottonseed which remains after the cotton is ginned is used to produce cottonseed oil, which, after refining, can be consumed by humans like any other vegetable oil. The cottonseed meal that is left generally is fed to ruminant livestock. Cottonseed hulls can be added to dairy cattle rations for roughage. Cotton is used to make a number of textile products. In addition to the textile industry, cotton is used in fishing nets, coffee filters, tents, cotton paper, and in bookbinding. The first Chinese paper was made of cotton fiber.
Cotton production and trade is widely spread across the world, with more than 80 nations cultivating the crop. However, its production, consumption and trade are dominated by a few nations.The world cotton production in 2011-12 is 123.64 million bales of 480-lb. each as against 116.56 million bales of 480-lb. each in 2010-11. The world's four largest cotton-producing countries are China, India, the USA and Pakistan, which together account for nearly 79% of the world production. Other major producers include Brazil, Uzbekistan and Turkey. The USA is the largest exporter of cotton, accounting for over one-third of global trade in raw cotton, which is estimated to be 11 million bales of 480-lb. each in 2011-12. While China is the largest importer of cotton.
India's annual production of cotton has been showing a steady increase in the recent years supported by a rise in acreage, better seed quality and improved practices. India is estimated to have produced 35.6 million bales of 170 Kgs of cotton from an acreage of 12.91 million hectares and a yield of 496 kg/ha in 2011-12, as against a production of 32.5 million bales of 170 Kgs, acreage of 11.14 million ha and yield of 496 kg/ha in 2010-11. Interestingly, while India has the largest area in the world under cotton cultivation, its yield is one of the lowest at around 500 kg/ha as against the world average yield of 740 kg/ha.
In India, cotton is a predominantly a monsoon-season crop. It is planted from the end of April through September, and harvested from October to January, based on the time of sowing. Cotton is produced in three zones, the Northern zone comprising the states of Punjab, Haryana and Rajasthan, the Central zone comprising the states of Maharashtra, Madhya Pradesh and Gujarat and the Southern zone comprising the states of Andhra Pradesh, Karnataka and Tamil Nadu. Cotton cultivation is also gaining momentum in the state of Odisha. The states of Gujarat, Maharashtra and Andhra Pradesh are the major producers of cotton, accounting for about 75% of the total production.
India has been a major exporter of cotton, since 2005-06. It is currently, the world's second largest exporter. It exported around 8.4 million bales of 170 Kgs of cotton in 2011-12. India mostly imports Long and Extra Long Staple (ELS) cotton from the US, Egypt, and West Africa.
Factors influencing Cotton trading
- The domestic demand supply scenario, inter-crop price parity, cost of production and international price situation are the major factors that influence prices in the market.
- Cotton prices especially cotton seed prices.
- Quality of cotton seed oil cake especially the oil%.
- Export and domestic demand of cotton, global production demand has a direct correlation to the pricing of cotton irrespective of the variety.
- Monsoon plays most crucial factor in the production of cotton. Weather, pests, diseases and other risk factors associated with agricultural crops are also important for cotton.
- Direct procurement by the government agencies and storage in warehouses. Government policies with relation to import, export and Minimum Support Price are significant influencers.
- Cotton being used primarily in manufacturing products such as clothing and home furnishings, the overall health of associated industries and economic well-being of the final consumer are important.
- New developments in the textile industry, with regard to development and adoption of new technology, fibres, mechanisation, and so forth impact cotton prices in the long run.