Cotton exports to rebound on bumper harvest, weak rupee

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New Delhi: Cotton exports by India, the world’s second-largest supplier, will rebound in the year through September 2012 on bumper production and a weak rupee, but bigger harvests in top buyers—China and Pakistan—may limit sales realisation, government and industry officials said on Monday.

Cotton exports may climb to anywhere between 8 million and 9 million bales in 2011-12, compared with 7 million bales last year, aided by the absence of government restrictions on the fibre’s trade, the officials said. The shipments fell by more than 18% last year, as the government maintained a quantitative ceiling until late July. Last month, the government announced the continuation of unrestricted cotton exports in 2011-12 until further notice. “Cotton exports will be more than last year as production will be higher. Our estimate is cotton output is likely to be 36.1 million bales, which is more than the Cotton Advisory Board’s estimate,” said agriculture secretary PK. Basu. India will likely harvest a record crop of 35.5 million bales in the marketing year starting October1 on higher planting and plentiful rains, the government-backed Cotton Advisory Board had forecast last month.

Cotton planting rose 9% to around 12 million hectares from a year earlier on wide-spread monsoon showers. The country produced 32.5 million bales of cotton in 2010-11.“Shipments will definitely rise this year, if the government doesn’t restrict exports. We expect exports to continue without curbs in 2011-12 as the crop looks excellent and domestic supply will be adequate,” said a senior executive with a major trading house in Mumbai.

However, despite robust demand for the Indian cotton, export realisation is unlikely to touch record levels in the last year when flood-hit China and Pakistan ramped up purchases of the Indian cotton like never before to keep their textile mills running, as global stockpiles had tumbled to a multi-year low. “Such moments (of acute global shortage) come rarely and one shouldn’t expect that level of returns this year. But overall, it would still be a good year due to a depreciation of the rupee against the dollar,” said a senior government official.

The rupee has depreciated more than 8% against the dollar since September as investors banked on the haven appeal of the greenback amid the financial turmoil, making overseas dispatches more remunerative for Indian traders.

Cotton production in China and Pakistan are expected to rise to 7.25 million tonner and 2.27 million tonner in 2011-12, compared with 6.40 million tonner and 1.91 million tonner, respectively, a year earlier on better weather conditions, the International Cotton Advisory Council said. Global cotton consumption is expected to touch 24.72 million tonner in 2011-12, compared with an output of 26.91 million tonner, according to the Council’s estimate. Bigger harvests in in key countries due to higher planting in 2011-12 will drive up stocks and may drag down prices, it added. Domestic cotton prices were ruling around R39,000 per candy of 356 kg each on October 7, down from R61,500 per candy as of April 1.

Source: http://www.financialexpress.com/news/cotton-exports-to-rebound-on-bumper-harvest-weak-rupee/858185/0

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