India's cotton exports should hit a record 12.7 million bales in the season that began on October 1, 2011, up about 10 percent from an earlier estimate, a senior government official said, with the rise spurred by demand from China, the world's largest user.
But falls in international prices mean exports will not hit the 13 million bales registered and are even likely to have prompted the world's second-largest exporter of the fibre to import 1.2 million bales so far in the year ending September 30, 2012.
"Total export registrations were for 13 million bales but exports are likely to be 12.7 million bales only as prices declined in overseas markets," Textile Commissioner A.B Joshi told reporters after a meeting of the Cotton Advisory Board meeting (CAB). The most-heavily traded S-6 variety cotton in India's local market is being sold at around 90-91 cents per lb compared with 83-84 cents per lb landed cost for African cotton.
At 1337 GMT, the key US December cotton contract on ICE was trading down 0.91 percent at 76.27 cents per lb.
"Lower prices of the fibre in the overseas market has prompted mills to import more. Imported African cotton is cheaper by 6-7 cents per lb than Indian cotton," Joshi said. Tight domestic supplies of cotton and lower prices abroad have prompted Indian textile mills to ramp up imports. China has just moved to allow its mills to import an extra 400,000 tonnes to take advantage of the low global prices, bringing total import quotas issued this year to about 2.8 million tonnes.
In the United States, the world's biggest exporter, record inventories and expectations the 2012/13 crop could be larger than initially expected have undermined a recent rally in prices on the back of concerns about India's next harvest. Drought has hit India for the second time in four years and cotton-growing areas were thirsty during June and July, the first months of the monsoon season. But latest data on Thursday showed a mixture picture of rainfall in cotton growing areas.
That meant the CAB could not issue its usual forecast for production and exports in the cotton marketing year that will start on October 1, Joshi, who is also chairman of the CAB, added. The CAB is a federal body which advises the Indian government on fibre availability and production.