due to sub-normal monsoon rains, the Cotton Association of India (CIA), a traders body, said on Wednesday.
The country is expected to produce 39.62 million bales (6.74 million tonne) in 2014-15, compared with a record 40.05 million bales in the current year, CAI president Dhiren Sheth said. One bale equals 170 kilogram.
In a contrast, both International Cotton Advisory Council (ICAC) and US department of agriculture have trimmed forecast for China's production in 2014-15 at 6.22 mt and 6.42 mt, respectively. Although they have predicted lower production for India in 2014-15 as well, at 6.04 mt and 6.31 mt, respectively, Sheth said both could revise up their forecasts.
However, the official production estimate for India is made by Cotton Advisory Board (CAB), which historically tended to be lower than traders' estimates. "CAIs production estimate for 2014-15 is conservative as output is likely to suffer due to the late and erratic monsoon," Sheth said. "However, in view of improved rains, acreage under cotton in the 2014-15 crop year is likely to be record-high and if the weather remains favourable, Indias crop size during 2014-15 will be higher than what is estimated by CAI," he added.
A bumper harvest in India for a second straight year will further pressure global cotton futures, which have already dropped 24% so far this year, as global year-ending stocks are estimated to rise for a fifth straight season to a record 21.69 mt in 2013-14. Cotton futures on the ICE gained 0.2% to 64.30 cents a pound in intraday trade on Wednesday, but the prices have dropped 34% since scaling a two-year peak of 97.35 cents on March 26.
Sheth said the Chinese crop would be lower in 2014-15 as it has started focussing more on food crops, while crop coverage in India could hit a record if the weather remains favourable. After a slow start, cotton planting picked pace in late July and area under the crop hit 11.69 million hectares until August 14, up 5.4%.
However, Indian cotton exports could drop in 2014-15, as biggest buyer China is offloading its own inventory and cutting down on purchases from overseas. Earlier this month, ICAC said global trade could decline 12% in 2014-15, as Chinese imports could crash by 26%. India's cotton exports for 2013-14 have been pegged at 11.40 million bales, up 12.4%, mainly on Chinese demand.
CAIs output estimate higher than CABs
Although CAI has pegged cotton production in 2013-14 at a record 40.01 million bales, it's much higher than the estimate of 39 million bales by the state-run CAB, and way above the agriculture ministry's projection of 36.59 million bales. The CAI said cotton arrivals in the domestic market as of July 31 were as high as 39.50 million bales, while the latest data by the Cotton Corporation Of India showed that arrivals up to July 13 were to the tune of 36.61 million bales. Since the arrivals are mostly over by end-June, the discrepancy between CAI and CCI data, even with a gap of just over two weeks, is inexplicable.