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Cotton output set to rise with increased sowing globally

Farmers are likely to increase acreage under cotton, resulting in higher output going forward, as the crop has been able to fetch relatively higher prices in 2016-17 and is expected to sustain remuneration levels in the current fiscal. However, the demand for cotton, especially by mills, is also rising and is likely to result in a consistent fall in year-end stocks of cotton, according to the International Cotton Advisory Committee (ICAC).

The total area under cotton globally will rise by five per cent to 30.8 million hectares in 2017-18 cotton year (July-June). However, ICAC says, India's cotton area is forecast to increase by seven percent to 11.3 million hectares in 2017-18, as farmers eye better returns brought about by higher prices and improved yields in 2016-17. Assuming the yield is similar to the five-year average,production could increase by three per cent to a little under six million tonnes".The Textile Commissioner of India had estimated the yield in 2016-17 at 568.29 kg/hectare. The highest yield was in south India and the overall yield was better than in previous years.Prerana Desai, Vice President-Research, Edelweiss Agri Services and Credit, said, Cotton has seen a unique season this year. In response to demonetisation, farmers delayed selling their produce and dictated the price throughout the season. As the seasonal price trough did not play out, the mills were caught unawares and missed out on opportunity to make purchases at lower prices.

Farmers in Rajasthan played a crucial role this season. Lower crop along with increased local consumption of cotton in Gujarat increased the raw cotton deficit in Punjab and Haryana, the largest consuming region after Tamil Nadu. Import parity for mills in the north emerged in March itself, and these mills ended up importing very large quantity of US cotton this season. This has improved their yarn realisation and US cotton may have earned some loyalty in this traditionally non-importing region of India." Production of about six million tonnes helps India surpass China and US by quite a high margin.China's production is expected to be higher by one per cent, at 4.8 million tonnes, the first increase

in five seasons. Farmers in the US are expected to expand harvested cotton area by 12 per cent to 4.3 million hectares, and assuming a yield of 938 kg/ha, production could grow eight per cent to four million tonnes, according to ICAC. Another reason for the global increase in cotton acreage is lower price realisation from soyabean. As a result, farmers switched from soyabean to cotton, according to one exporter. In India, despite high prices, imports have seen a sharp rise.

According to Desai of Edelweiss Agri Services, "Year-to- date imports (Oct-Mar) are around 980,000 bales vis-a- vis 450,000 bales during same period the previous year. While mills in the country have been quoted as saying that India will import more than three million bales this season, we are of the view that the pace of import will slow down from here on. Softening domestic prices has seen import parity disappear for mills in the south, and flatten for mills in north. India imported around 2.3 million bales of 170 kg in 2015-16. and may end up importing a similar or marginally lower quantity this season as well." Imports by China, now the world's third largest cotton importer, are expected to increase by three percent to 987,000 tonnes as sales from that country's reserves are falling.India's exports are projected to decline by 30 per cent to 886,000 tonnes.

MAS Holdings has acquired a US garment manufacturer, making it the first Sri Lankan apparel group to commence manufacturing in the US.MAS Holdings has acquired the business of Acme McCrary Corporation based in in North Carolina. MAS said its western hemisphere organisation will operate in four locations.Existing manufacturing facilities in Asheboro, North Carolina, USA and Choloma, Honduras will be upgraded, and complemented by a brand new facility in the Caracol Industrial Park in Northern Haiti.

In addition, the collaboration includes a distribution centre, also in Asheboro.The four facilities,totalling over 800,000 ft will add immense value to MAS, complementing its Sri Lanka and wider offering to its US customers with an on-shore and near-shore, strategy, to deliver speed and flexibility, enabling the organisation to react rapidly to the dynamic market environment, the company said.

Commenting on the venture, Chairman MAS Holdings, Mahesh Amalean said “As a continuously evolving organisation, we are constantly looking to transform our design and manufacturing landscape to best represent the dynamic interests of our customers.The need for a robust model that enhances speed of response and cost competitiveness without compromising quality, to ultimately provide winning product creations for our customers, has always been at the core of our business principles. Bringing the strength of MAS Holdings together with Acme McCrary Corporation's 100 year heritage will provide our customers with a unique value proposition, which we are honoured to champion, going forward.” Since its beginnings in 1987, MAS Holdings has significantly expanded its operations in Sri Lanka, and employs over 70,000 associates on the island, in 40 locations. Its international expansions have added a further 15,000 associates in 14 countries, prior to these new investments.

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