Cotton carryover stocks seen surging as exports slip

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CAI, US farm body peg demand below production this year

CHENNAI, JAN. 14:

The country could be burdened with cotton inventories at the end of the current season ending September with export prospects, particularly to China, looking bleak.

The US Department of Agriculture and the Cotton Association of India have projected a demand far lower than production this season.

In its estimates based on December data, the Cotton Association of India sees cotton carryover stocks of 147.46 lakh bales. In its estimates, the association has not made any mention of exports.

However, if one were to go by the Cotton Advisory Board projections, then exports could be around 70 lakh bales. Last year, a record 127 lakh bales were exported with China being a major importer. This year, however, exports have been tardy with China cutting down its purchase.

If cotton exports match that level, still the carryover stocks for the next season will be higher at over 77 lakh bales against 53.21 lakh bales for this season.

The association has pegged this year’s production lower at 353.25 lakh bales of 170 kg each, while demand is estimated at 271 lakh bales for the current season.

“The cotton crop continues to look promising this year despite the reduction in acreage,” said Dhiren Sheth, President of CAI.

The association’s latest estimate on cotton output is a tad lower than its December estimate of 355 lakh bales but higher than the Government’s estimate of 334 lakh bales.

According to the association, production last year was 373 lakh bales. The projected balance sheet drawn by the association for 2012-13 estimated the total cotton supply at 418.46 lakh bales while the domestic consumption is estimated at 271 lakh bales, thus leaving an available surplus of 147.46 lakh bales.

Meanwhile, the recently-released US Department of Agriculture data estimates Indian cotton output at 325 lakh bales and domestic consumption at 264 lakh bales for the current year.

“Domestic demand for cotton has been weak of late, but is expected to improve over the next few months as mills work off their supplies of imported cotton and the domestic cotton they had in place to cover their pre-harvest needs,” the report said.

TUMBLING EXPORTS

India’s cotton exports are likely to tumble by 60 per cent to 57 lakh bales compared with last year, the USDA report said.

“India, the world’s second-largest exporter, is estimated to have shipped a record 147 lakh bales in the last marketing year. The 2012-13 export estimate is unchanged at 57 lakh bales,” the USDA report pointed out.

According to the USDA report, cotton exports in the country have reached an estimated 20 lakh bales during August-December period of the ongoing year.

However, there seems to be a bright spot for the fibre exports as China’s imports are forecast higher by the USDA due tight free stocks resulting from the large accumulation of cotton in the national reserve.

Source: Business Line

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