Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

India's cotton output may hit 9-year low, curb exports - trade

Published 06/12/2018, 09:26 pm
Updated 06/12/2018, 09:30 pm
© Reuters.  India's cotton output may hit 9-year low, curb exports - trade

© Reuters. India's cotton output may hit 9-year low, curb exports - trade

* Fewer rains hit crop in top growers Gujarat, Maharashtra

* Output seen at 32.5 mln bales vs 37 mln bales yr ago

* Exports seen at 5-6 mln T vs earlier forecast of 10 mln T

* India is world's top cotton producer

By Rajendra Jadhav

MUMBAI, Dec 6 (Reuters) - India's annual cotton output could drop 12 percent to the lowest in nine years as limited rainfall in the top two producing states has slashed crop yields, potentially cutting exports from the world's top producer, industry officials said.

Lower cotton shipments from India will allow rivals such as the United States, Brazil and Australia to increase cargoes to key Asian buyers such as China and Pakistan. It may also support global prices CTc2 that have fallen 16 percent since hitting a four-year peak in June.

India could produce 32.5 million bales in the 2018/19 marketing year that began on Oct. 1 - the lowest since 2009/10 - as farmers in the western states of Gujarat and Maharashtra are reporting poor yields, said Chirag Patel, chief executive at major exporter Jaydeep Cotton Fibres Pvt Ltd.

Rains in Gujarat and Maharashtra, which account for more than half of India's cotton production, were nearly a quarter below normal during the June-September monsoon season.

"Many farmers had to uproot plants after first cotton picking. There won't be a second or third picking like every year," Patel said.

India produced 37 million bales in 2017/18 and was expected to harvest 36.1 million bales this year, according to the state-run Cotton Advisory Board.

"Despite higher prices, supplies are not picking up. The crop is lower than estimated," Patel said.

New season cotton supplies usually start from October and peak in November and December. But spot supply in the past two months only reached around 7 million bales compared to 10 million bales a year ago, said Atul Ganatra, president of the Cotton Association of India (CAI).

Pink bollworms also hit plantation in Maharashtra, he said.

Indian farmers have adopted genetically-modified seeds known as Bt cotton that are resistant to bollworms, but it hasn't stopped the infestations. Pink bollworms consume the fibre and seeds inside a cotton plant's boll, or fruit, and yields fall.

LIMITED SURPLUS

In June, traders were expecting India to export as much as 10 million bales amid strong demand from China due to the trade dispute between Beijing and Washington. smaller crop size will limit surplus for overseas sales and lift local prices MCOTc1 , said Arun Sekhsaria, managing director of exporter D. D. Cotton.

"We could export 5 to 6 million bales. Export demand is likely to pick up in coming months as Indian cotton is cheaper than other origins," Sekhsaria said.

Indian cotton is being offered around 84 to 85 cents per lb, cost and freight, to buyers in Bangladesh and Vietnam, versus around 90 cents for those from the United Sates and Brazil, dealers said.

In the current season, traders have contracted to export around 2.5 million bales and have shipped around 1 million bales, said Ganatra of CAI.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.