India's cotton output seen up 9.8 percent

According to a report, India's cotton output is set for a second successive record harvest in 2011/12, up about 10 percent over last year's 32.5 million bales, a Reuters poll showed, signalling higher supplies from the world's number two producer amid sliding global prices. A survey of eight traders pegged the average output for the season starting in October at 35.7 million bales, on higher acreage and subject to well-distributed rains.
India's cotton exports have already been cited as a key factor in dictating fibre prices in the 2011/12 season by the chief executive of the world's biggest cotton merchant. The US Agriculture Department's latest forecast suggests India's exports will be five million tonnes in 2011/12.
India's four-month rainy season ending September 30 has just entered the second half.Weather conditions impact cotton yield and although rains in the key western growing areas had a slow start they are likely to pick up in the coming weeks. "Rains at regular intervals in the remaining period of the monsoon will ensure the higher output," said D.K.Nair, secretary-general of the New Delhi-based trade body Confederation of Indian Textile Industries."Cotton output could hit a new record on higher acreage," said Arun Sekhsaria, a trader.
That could create a global glut at a time when cotton prices have halved since touching a high of $2.27 per lb in March, but traders said domestic and overseas demand for raw cotton should remain at current levels, despite a weak world economy. India cotton prices are traditionally up to 50 percent lower than global levels because of cheaper farming techniques and the product's inferior quality making fibre exports attractive to other textile-producing countries in Asia, including China.
Domestic demand has also risen in sync with India's economic growth of 8.5 percent to 9 percent a year, largely over the last four years, as people use increasing wealth to move away from polyester and the country boosts apparel exports. India has removed quantitative restrictions on overseas sale of cotton for the current year to September.The government previously allowed 6.5 million bales for the year. Cotton sown land stood at 10.99 million hectares by last week, a rise of 5.3 percent over a year ago, mainly due to higher acreage in Gujarat, the top producing western state that shares about a third of the country's total output.