Mumbai: Cotton exports from India, the world’s second biggest supplier of the fibre, may top a forecast for a record 7 million bales as importers such as China and Pakistan seek alternatives to reduced supplies from the US.
Reaping time: Last month, China cut the lower end of a sliding scale of import duties for the commodity in 2008—a move that may boost purchases from suppliers such as India.
Exporters have already sold 5.5 million bales in the first three months of the season that began on 1 October, matching sales for the whole of the previous year, Jagadip Narayan Singh, India’s textiles commissioner, said in a telephone interview on Thursday in Mumbai. A bale weighs 170kg (375 pounds).
India competes with the US and Uzbekistan to ship cotton to China—the world’s largest buyer of the fibre. The US may harvest its smallest cotton crop in 24 years after some farmers switched fields to sow more profitable grains, researcherInforma Economics Inc. said. Soya bean and wheat both jumped more than 70% last year, compared with the 21% gain in cotton.
“India is probably the only country which is recording an increase in cotton production when global supplies are falling,” K.F. Jhunjhunwala, president of Mumbai-based Cotton Association of India, said. “That’s boosted demand for our cotton.”
Last month, China cut the lower end of a sliding scale of import duties for the commodity in 2008—a move that may boost purchases from suppliers such as India. The lowest duty under a flexible levy that falls as local prices rise will be 5%—down from 6%, while the upper limit stays at 40%.
“India has managed to sell as much as it exported last year in just three months,” Subhash Grover, managing director of the Cotton Corp. of India Ltd—the nation’s biggest exporter, said. More than half of the cotton sold this year has been to China, he said.
India is forecast to gather a record 31 million bales in the year to September after farmers increased the use of genetically altered seeds, Singh said. Exports may reach 7 million bales, Singh had forecast in August last year.
The US will plant cotton on 9.19 million acres this year—the smallest in more than two decades and down 15% from the previous year, Tennessee-based Informa said last month.
“India is filling in the gap” created by reduced supplies from the US, Singh said.
Cotton futures for March delivery fell 0.2 cent (Rs5.07), or 0.3%, to 68.71 cents a pound on Thursday on ICE Futures US—formerly the New York Board of Trade. The Cotlook A Index, which provides a gauge of world cotton prices, may average 67 cents a pound this marketing year beginning 1 August—up from just over 59 cents in the previous year, according to the International Cotton Advisory Committee.
In India, cotton futures for March delivery rose by Rs5.70, or 1.2%, to Rs491 per 20 kg on the National Commodity & Derivatives Exchange Ltd on Friday in Mumbai.
Pakistan, the fourth largest cotton producer, allowed import of 500,000 bales of the fibre from India to help boost stockpiles, after adverse weather and pest attacks damaged the crop. Indian farmers planted cotton seeds, including Monsanto’s Bollgard II variety, on 9.5 million ha—4% more from a year ago, according to the farm ministry. More than half of the area for cotton has been planted with gene-altered seeds this year, Singh said.