Cotton exports from India, the world's second-largest producer, are likely to drop by nearly half to 7 million bales in the 2012/13 marketing year that began on October 1, a senior government official said, hit by waning global demand and lower output.
Indian traders shipped a record 12.9 million bales, each of 170 kg, in the previous marketing year, mostly to China, making it the number two exporter to the United States and ahead of Australia which shipped around 5.8 million bales. "China is sitting on huge stocks. The world is having enough cotton and no one is queuing for exports," Textile Commissioner A.B. Joshi told reporters after a state-run Cotton Advisory Board (CAB) meeting.
China, the world's largest consumer of cotton and India's biggest client, is expected to cut imports by over 50 percent in the 2012/13 as the Asian giant tries to trim bulging cotton stocks. Farmers in India are expected to harvest 33.4 million bales of cotton in the current year, down 5.4 percent
from a record 35.3 million bales in the previous year, said Joshi. A Reuters poll of 10 traders pegged the output for 2012/13 at 34 million bales, down 3.7 percent from last year. In 2011/12, high domestic prices had encouraged farmers to plant cotton on 12.2 million hectares, up 8.93 percent from the previous year. Global prices this year have been falling sharply on waning world demand and an expected rise in world output. The December cotton contract in New York has fallen about 25 percent since April 1, when farmers in the United States, the world's biggest exporter, started planting. At 1223 GMT on Thursday, the contract was trading down 0.17 percent at 72.04 cents per lb.
Spot prices in India are currently around 81 cents per lb. Traders are expecting any sharp decline in domestic cotton prices to trigger government buying to protect farmers' interests. The October cotton futures contract closed down 1.44 percent at 15,790 rupees ($300) per bale.
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