Bloomberg
The cotton harvest in India, the second-biggest producer and shipper, may be less than forecast if monsoon rains last longer than normal, according to the Confederation of Indian Textile Industry. Futures advanced.
Production in the year from October 1 may be less than the 32.55 million bales estimated by the Cotton Advisory Board last month, Confederation Vice Chairman Prem Malik said. by phone from Mumbai. Output this year is estimated at 29.5 million bales, according to the board. An Indian bale weighs 170 kilograms.
The missed forecast may further tighten global supplies, stoking prices … on slumping inventories and damage to the crop in China, the largest producer. U.S. mills have been “panic” buying
“The expectations that the Indian monsoon may linger for longer than normal is something of extreme relevance to the international cotton market,” said Luke Mathews, commodity strategist at Commonwealth Bank of Australia. “Global supplies are extremely tight.”
“If the rains persist, then definitely it’s going to affect the crop,” Malik said on September 16. “The plants will not get the sunlight.”
Malik has restated a call from the group for India’s cotton exports to be delayed from next month to January.
India’s government plans to allow the export of as much as 5.5 million 170-kilogram bales in the year from October 1. Exports this year may be 8.3 million bales, according to an estimate from the Cotton Advisory Board.
“We are nowhere saying exports should be banned, exports should be allowed starting January,” said Malik, who’s worked in the textile industry for three decades. Indian textile makers risk being “stalled because the availability of raw material is not there,” said Malik.
India’s monsoon rains, the main source of irrigation for the nation’s 235 million farmers, normally draw to an end from September, the last month of a four-month season. Still, so far this September, rains are 122 percent of the 50-year average and clouds will begin to withdraw only by the end the month, the Indian Meteorological Department said on Sept. 14.
In the western state of Gujarat, the nation’s biggest cotton producer, rains were 54 percent above normal between June 1 and Sept. 15, according to the weather office. In Maharashtra, the second-largest grower, rains have been 25 percent more than average, it said.
“The global market does need a rebound in production to come through to help alleviate the supply tightness,” said Commonwealth Bank’s Mathews. “If we miss output expectations in any nation, let alone a large producer and exporter such as India, it is something that is very, very important.”
Global cotton inventories will fall to 45.4 million, 218 kilogram bales in the 12 months to July 31, the lowest level in 14 years, according to U.S. Department of Agriculture data.
