Output may be around 35 mn bales, 2.7% less than the Nov estimate.
Cotton production in India, the world’s second-biggest grower, will be less than previously forecast after excess rainfall in some growing regions hampered harvests, a group said.
Output in the year started October 1 may total 34.75 million bales of 170 kg each, 2.7 per cent less than the 35.7 million bales forecast in November, the Cotton Association of India said in an e-mailed statement on December 18. The nation’s Cotton Advisory Board predicted the crop at 32.55 million bales.
A smaller crop may bolster a record-breaking rally in global prices this year as adverse weather damaged crops in the US, China and Pakistan. Cotton jumped by the daily limit for a third day to a record $1.5412 a pound on Monday on signs that growers may struggle to meet mounting demand from China, the world’s biggest consumer.
“We have lowered the estimate to a conservative level, though rain has been equally beneficial to the crop in some areas,” Dhiren Sheth, president of the association, said in an interview. “We are hoping the government will allow more cotton exports as there’s going to be enough surplus available.”
India’s textile ministry in October issued export contracts for 5.5 million bales for shipment by December 15. Actual exports were far below that amount, so the Directorate General of Foreign Trade will issue fresh contracts for the unshipped amount after it determines how much cotton is available, it said on its website.
Market tightness
Cotton for March delivery gained 4 cents, or 2.7 per cent, to $1.5412 a pound on ICE Futures US in New York and traded at that level at 1:26 pm Mumbai time. Prices have more than doubled this year, heading for the biggest gain since 1973.
“It looks like the tightness in the global cotton market will continue for a while, as the US seems to have sold out most of its crop in the absence of supplies from India,” Sheth said. “India remains the only major country with cotton supplies.”
India’s domestic demand may total 26.6 million bales, leaving a surplus of 14.3 million bales, less than the 15.3 million estimated last month, the cotton association said. Cotton sales by farmers were 10.2 million bales as of December 19, compared with 10 million a year earlier, according to the Cotton Corporation of India, the nation’s biggest buyer.