Cotton output likely to surpass estimates

Aug 27 | Updated: Aug 28 2008, 05:58am hrs
Cotton production, the second-biggest in the world, may be more than forecast as recent rain in the main growing areas improves yields, increasing pressure on global prices.

Output in the year starting October may exceed the 31.5 million bales (5.36 million metric tonne) estimated by Cotton Corp of India, the nation's biggest buyer, Subhash Grover, managing director, said in an interview.

A larger crop may create a cotton surplus in India of 1.02 million tonne, Grover said. Global production in the coming year will reach 24.05 million tonne, 78,000 tonne more than expected in July, UK-based Cotlook said on August 21. Consumption will be 25.69 million tonne as demand declines in China, the biggest user.

We were thinking production will be lower because of dry weather, but now thats improved, said Harish Galipelli, head, research at Karvy Comtrade Ltd in Hyderabad, a southern Indian city. Favourable weather will result in higher output.

Rainfall in the states of Maharashtra and Gujarat, countrys biggest cotton producers, was normal to excessive in the July 24 to August 13 period, the state-owned India Meteorological Department said on its web site.

The crop is in excellent condition, said SR Chaudhari, director of agriculture in Gujarat, the largest producer. Production and productivity will be better than last year.

Farmers planted the crop on 8.6 million hectare as of August 22, 5% less than a year ago, according to the farm ministry.

The area is less than last year but farmers have sown good quality seeds, Cotton Corps Grover said yesterday. Yields will improve and make up for the lost area. Sowing is almost complete and the crop is progressing well. India starts cotton planting in June and the harvest begins in October.

China is forecast by the US Department of Agriculture to produce 35.5 million bales (7.73 million tonne) in the year started August 1, down from 35.8 million bales the previous year.

Cotton for December delivery gained 1% to 70.12 cents a pound on Wednesday on ICE Futures US, the former New York Board of Trade. The most-active futures have advanced 19% in the past year. A bale of cotton weighs 480 pounds (218 kilogram) in the US, compared with 375 pounds in India.

Bloomberg