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Commodity
COTTON
Description | Overview | History | Cultivation pattern | Cotton producing countries | Indian cotton market | Major trading centers
Description

Cotton is a creamy white soft fiber that is primarily used to manufacture textile and garments throughout the world. Cotton is derived from around the seeds of the cotton plant that comes from the genus of Gossypium and family Malvaceae. This plant is somewhat bushy in appearance and grows well in tropical and semi-tropical climates. The plant has leaves divided in three parts and capsule shaped seeds around which the soft white fiber grows.

Cotton fiber obtained from the plant is first processed to remove proteins from it. The remainder left is a natural polymer having characteristics like strong, durable and absorbent and it is spun into threads for further use.

Overview

Cotton is considered a very important crop, as it is the major source of clothing to the world. Besides this use of cotton, it is also used in various industrial applications. Hence, it is ranked among the most cultivated and traded commodities on the planet. Cotton and its various by-products are traded in the market and are looked upon as an important means of investment. The by-products of cotton include cottonseed, staple cotton, cotton yarn and cottonseed oilcake. The details about these by products is given below
  1. Cottonseed - Cottonseed is an oilseed that places 2nd in the list of largest produced oilseeds in the world. It has a vast number of uses as it provides food for humans, feed for animals, fertilizer for plants, padding fiber and also used in explosives and computer chip boards.
  2. Cottonseed oil - Cottonseed oil is produced by crushing the cottonseeds. During the processing of cottonseed with the use solvent or mechanical methods, hull and cottonseed meal are also produced. This oil makes a healthy and cholesterol free edible oil that is consumed in the Western countries.
  3. Staple cotton - The cotton fiber is ginned in different lengths before it is brought for selling into the market and this ginned cotton is known as staple cotton. Long staple cotton is ginned cotton with length of 27-29 mm. Medium staple cotton is ginned cotton with a length 24-26 mm. The ginned cotton below this length is called short staple cotton.
  4. Cotton yarn - Cotton yarn is made by processing the cotton fibers and is used for producing a wide range of textiles, apparel and other products. Cotton yarns are spun with the help of spinners, which are getting more and more developed capacity wise with the improvement in technology. The other major processors through which cotton is spun are filament yarns and nonwovens.

Cotton is basically produced in the areas having tropical climatic conditions. China is the largest producer of cotton in the world followed by United States of America and India. The world’s total produce of cottonseed hovers around 35 million tons. It is grown over 31 million hectares of land all around the globe. But the production of this crop has shown a fluctuating trend of production over the recent years due to various factors like crop failures etc. The world trade in cottonseed is relatively low as compared to its oil’s trade. From among these 35 million tons of cotton produced in the world, only 8 million tons of it is traded in its original form. The rest of cottonseeds are crushed to make oil. Cottonseed oil production figures up to around 4.5 million tons and of cottonseed meal is around 16 million tons annually. Spun cotton yarns’ world production figures reach around 28 million tons an year.

Talking about the consumption pattern, cotton contributes to around 37% of the total fiber usage of the world. Cottonseed, generally, is consumed within which the country it is produced to make its oil. The major consumers of cottonseed are

  • China

  • India

  • Uzbekistan

  • United States

  • Turkey

  • Pakistan

The first three countries consume almost all the cottonseed produced in the countries. United States of America’s consumption figures are around 2.5 million tons i.e. approximately 45% of the total cottonseed production. Even most of the cottonseed oil cake is consumed at the place of its origin only. This also affects the trade of oil cakes in the world. The trend of consumption of cotton and its by-products is also fluctuating since the past years.

United States dominates the world trade situation in cottonseed and its by-products context. It is the largest exporter of cottonseed in the world with Australia exporting around 2 to 3 lakh tons per year. The total cottonseed oil meal traded in the world sums up to a mere 5 to 6 lakh tons annually. China is the largest exporter of this by-product of cotton with the exports of around 1.2 lakh tons. The major importers of cottonseed in the world are

  • Japan

  • Mexico

  • European Union

  • Canada

  • Turkey

  • Indonesia

  • Mexico

  • India

History

Cotton had been used to make fine, lightweight clothing since a long time. As cotton clothes are not meant for wearing in the cold areas, clothing for the tropical areas of the world had been provided by cotton for over years now. The cotton plant originated as a wild plant but the human beings had understood its importance much late. Some researchers assume that the Egyptians started using cotton in clothes as early as 12000 BC. But the actual evidence of cotton cloth was found in the Mexican caves that is considered to be 7000 years back. One more evidence of cotton cloth was discovered from the archeological site of Mohenjo –Daro that is considered to be as old as the previous evidence. This makes it clear that the wild cotton was actually domesticated in Southern America and India only. In fact the earliest descriptions of this plant came from the Indian subcontinent in the Rig Veda in 1500BC that says that India has been producing the crop for more than 6000 years. Herodotus, a Greek historian, also wrote about the Indian cotton, when he came to India in around the year 500AD.

In the 16th century, when the Spaniards came Peru just after the discovery of America, they found that the native people had already been growing cotton and wearing cotton clothes. They took this fiber to their homeland and it was then, when cotton was introduced to the rest of the world. With time, it grew popular and cultivation of cotton spread to the warmer places on the earth.

Until the start of the 18th century, cotton became the main constituent of the clothing of the world. When Britain emerged as a super power at that time, it banned the import of cotton and cotton clothes into its colonies so as protect its sheep and wool industry. But the ban was lifted soon. With time the cotton textile industry encountered various technologies with the help of which it grew and developed to reach its current position.

Cultivation pattern

Cotton is a tropical crop as it thrives on hot and humid climatic conditions. These conditions are present in the areas close to the equator like southern part of North America, Northern Africa and Asia. It generally needs a long duration period to grow and get mature i.e. 5 to 6 months. Also it needs a dry weather at the time of harvesting to get an exceedingly good yield. There are a whole lot of methods present to protect the cotton crops from weeds and diseases. The various methods include spraying of herbicide, use of cultivator, rotary hoe, flame cultivator etc. Harvesting is done with the help of spindle type pickers or strippers.

The planting time of cotton crops in the world varies vastly from February to June. In India, the crop is cultivated as a khariff crop as it is sown in the months of March to September. The mature crop is harvested in the months of November to March. The crop starts reaching to the Indian markets from the months of November to March.

Cotton producing countries


Cotton as a crop is produced all around the world but mostly in the warmer regions of the world. It does not grow wild as earlier but it is commercially and strategically produced now. The total production of cottonseed in the world marks at around 35 million tons per annum. Other by-products of cotton like cottonseed oil and cottonseed oilcake have their production figures hovering around 4.5 million tons and 16 million tons respectively. Spun cotton yarns also makes one of an important by-product of cotton having an output of around 28 million tons. The major producer countries of cotton and its by products along with their production figures of cottonseed are

  • China (8.67 million tons)

  • United States of America (6.07 million tons)

  • India (5.68 million tons)

  • Pakistan (3.4 million tons)

  • Brazil (2.13 million tons)

  • Uzbekistan (1.59 million tons)

  • Turkey (1.3 million tons)

  • European Union (0.71 million tons)

  • Australia (0.4 million tons)

China leads the list of the cottonseed producing nations as well as cottonseed oil meal in the world. But, though it is the largest producer of cotton in the world it is also the largest consumer of the fiber and the large production figure is insufficient for satisfying the domestic consumption demand in there. That is why the second largest producer of cotton i.e. USA acts as the major player in the world market. The trend of production has ever been fluctuating over the past years. Cotton is grown over around 31 million hectares land around the world with India leading the list in this context.

Production of cotton in India

India is the third largest producer of cotton and its derivatives in the world. The country is responsible for the origination and domestication of the cotton crop. India has the maximum area under cotton cultivation estimating up to around 9.50 million tons i.e. 21% share in the world. A number of varieties of cotton are cultivated in the country like Bengal Deshi, V-797, Jayadhar, etc and also the cotton fibers are graded into three major grades i.e. ‘Short’, ’Medium’ and ‘Elongated’. The northern areas in the country provide with mostly short and medium staple cotton, central areas provide with long and medium staple cotton and the southern areas largely with long staple cotton. The quantity of production of cottonseeds in India is around 5.68 million tons. The states in India producing cotton crop are

  • Maharashtra

  • Gujarat

  • Andhra Pradesh

  • Haryana

  • Punjab

  • Rajasthan

  • Karnataka

  • Tamil Nadu

  • Madhya Pradesh

The above-mentioned states cover around 95% area under cotton cultivation as well as output in India. Maharashtra followed by Andhra Prad3esh and Haryana are the largest cotton producing states of the country. Regarding the cottonseed oil, around 80% of the cottonseed produced in the country is crushed to obtain oil. The meal produced after the extraction of oil from the seeds sums up to around 2 million tons. Like the fluctuations in the world production of cottonseed, Indian production also fluctuates every year. Also, the productivity of cotton in India is quite low as compared to the productivity of the crop in the rest of the world. World average productivity of the crop is around 500 kg per hectare but Indian productivity just reaches 300 kg per hectare.

Indian cotton market


Cotton has been a traditional crop in India as it has been grown here since it has been domesticated. It constitutes to around 60% of the fiber consumed in the textile sector of the country. This sector is also very important for the country as it provides a large number of employment opportunities and also contributes significantly to the Gross Domestic product of the country. The country stands first among the countries having the maximum area under cultivation of cotton and place third in the list of cotton producing countries.

India produces around 35 million tons of cottonseed in a year. Maharashtra is the leading cotton producing state in the country with a production of around 6 lakh tons. The cottonseed meal is produced in the country to the context of 2 million tons. The area on which cotton is produced is around 9.50 million hectares in India. The yield per hectare in India is very low as compared to the other producing countries of the world. The country consumes all of the cotton produced in the country and ranks among the largest cotton consuming countries. The main demand comes from the textile sector.

Regarding the Indian scenario in the world trade, India hasn’t been a significant player in the world market. India sometimes exports cotton and its by-products and some times acts as an importer to satisfy its huge domestic consumption demand. Cotton earns the Indian economy the maximum foreign exchange among the exported commodities. India is the largest exporter of cotton yarn in the world accounting up to 450 million kg i.e. 17% market share. The countries to which India exports cotton yarn are

  • China

  • Korea

  • Bangladesh

  • Egypt

  • Taiwan

  • Hong Kong

  • Turkey

  • Japan

But it also adds on to the list of expenses in the budget of the economy as large amounts of cotton are imported due to the superior quality of foreign cotton. India imports around 22 lakhs bales of cotton, which is same as the 12% of the domestic productions. Also the rate of imports is overtaking the rate of exports in the country making it a net importer of cotton. Also cotton sector in India is largely unorganized but several associations are trying to change the scenario.

Market Influencing Factors

  • Relationship with other competitive fibers

  • World demand for consumer textile and demand from the cattle-feed industry in the country

  • Discovery of new cotton markets

  • Introduction of new and developed technology

  • Fluctuations in domestic cotton production

  • Delays in the arrival of cottonseed for crushing

  • Price and other policies of the government regarding the cotton sector

  • Import-export scenario in the country

  • Fluctuation in currency value

 

Major trading centers of Cotton


The major international trading centers in which cotton is traded are

  • New York Board of Trade (NYBOT) – New York

  • Shanghai Commodity Exchange – China

The cotton trading centers in India are

  • Akola (Maharashtra)

  • Parbhani (Maharashtra)

  • Nagpur (Maharashtra)

  • Yeotmal (Maharashtra)

  • Adilabad (Andhra Pradesh)

  • Karimnagar (Andhra Pradesh)

  • Dhule (Maharashtra)

  • Surendranagar (Gujarat)

  • Bhavnagar (Gujarat)

  • Sriganganagar (Rajasthan)

  • Bhatinda (Punjab)

  • Hisar (Haryana)

  • Sirsa (Haryana)

  • Guntur (Andhra Pradesh)

  • Kurnool (Andhra Pradesh)

  • Coimbatore (Tamil Nadu)

  • Gulbarga (Karnataka)

  • Ahmednagar (Maharashtra)

  • Sangli (Maharashtra)

  • Kota (Rajasthan)

  • Mumbai (Maharashtra)

  • Ludhiana (Punjab)

  • Delhi

  • Kanpur (Uttar Pradesh)

  • Bhilwara (Rajasthan)

  • Ahmedabad (Gujarat)

  • Surat (Gujarat)

  • Indore (Madhya Pradesh)

  • Kolkata (West Bengal)

  • Tirupur (Tamil Nadu)

  • Madurai (Tamil Nadu)

Also, cotton and its derivatives are traded in Indian commodity exchanges namely, National Commodity & Derivatives Exchange ltd, Multi Commodity Exchange of India ltd, National Multi Commodity Exchange of India ltd, The Bombay Commodity Exchange Ltd, Ahmedabad Commodity Exchange Ltd, The East India Cotton Association and Surendranagar Cotton oil & Oilseeds Association Ltd.

 
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