Business IdeasCotton exports to double on China, Pak demand
Cotton exports from India, the second-biggest grower, will more than double this crop season as China and Pakistan seek more fiber to make up for a shortfall in supplies from the US, a government official said.
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Shipments in the year that started October 1 may top 7 million bales of 170 kg each, compared with 3.3 million bales a year earlier, A B Joshi, India’s textiles commissioner, said in a telephone interview in Mumbai. Production is forecast to rise 5 per cent to 30.5 million bales after farmers planted the crop to a record area this year, he said.
Increased Indian supplies may help cool a rally that has pushed up cotton prices 41 per cent this year in New York amid concern demand will outpace supplies. World output will reach 102.7 million bales, down 1 per cent from last month’s estimate, and demand will rise to 113.5 million, more than expected last month, the US Department of Agriculture (USDA) said yesterday.
“India will be in a good position to take advantage of a shortfall from other major producers,” said Dhiren N Sheth, president of the Cotton Association of India. “There are concerns about crops in the US and China as well.”
In the US, the top exporter, output will decline to 12.5 million bales of 218 kg each, 3.8 per cent less than forecast last month, according to the USDA. Production in China, the world’s largest consumer, may slump by as much as 20 per cent this year on poor weather and reduced acreage, the Futures Daily reported October 15, citing its own survey.
“We have the advantage of being a big producer in times of a shortage elsewhere,” Joshi said.
China shipments
Indian exporters shipped 115,637 bales of cotton last month, according to the textiles ministry. Shipments to China may be as much as 40 per cent of India’s sales, Joshi said.
Indian cotton was offered at about 70 cents to 73 cents a pound on cost and freight basis at Chinese ports, Sheth said. Futures for December delivery gained 0.2 per cent to 69.20 cents a pound at 9:17 am in after-hours trading in New York. Futures rose 2.1 per cent yesterday, the most in four weeks.
“The popularity of Indian cotton has increased in the last couple of years because it is less contaminated and of a better quality,” Sheth said. “We also expect demand from Pakistan and Indonesia.”
Pakistan, the world’s fourth-largest producer, may import as many as 2 million bales this year as production may be little changed at 12 million bales, Anwar Tata, chairman of the All- Pakistan Textile Mills Association, said on October 28.
India’s textiles mills may import about 700,000 bales of long staple cotton, and demand from textile mills and yarn makers was “strong” in the past two quarters because of a revival in demand for clothes, Joshi said.