India?s cotton exports will likely tumble by a half in the marketing year started October 1 as biggest buyer China is expected to trim purchases by more than 50% due to swelling inventories there, official and industry executives said on Wednesday.
China, the world’s biggest cotton consumer, will likely import only 2.5 million tonnes (14.7 million bales) in 2012-13 after its record purchase spree last year to replenish inventories, according to the International Cotton Advisory Council (ICAC). China, which is also the world’s largest textile exporter, alone accounted for more than a half of cotton imports globally in 2011-12. ?In rest of the world, the pressure of accumulating stocks, combined with weak demand, could drive cotton prices down,? ICAC said in its latest report.
?I expect a decline in cotton exports this year on lower Chinese purchases, which may keep prices relatively more stable in the domestic market. Prices may stay in the range of R32,000 to R36,000 per candy, of 356 kg in the medium term,? said DK Nair, secretary-general of the Confederation Of Indian Textile Industry (CITI). Prices of ICS-105 variety (29 mm) are ruling around R34,300 per candy.
Adding to exporters? worries, US cotton ended the third quarter of 2012 with a 1.3% fall, building on its 24% crash in the second quarter as investors offloaded positions ahead of the Northern Hemisphere harvest amid expectations of a massive surplus. Apprehensions that China may unload a portion of its huge stockpile also aided the fall. Prices have since recovered a bit, although investors have remained largely cautious in the past one month about cotton.
Moreover, late last year, domestic cotton prices exceeded the global level for the first time in three years on depletion of stocks following record exports and monsoon fears.
The state-run Cotton Advisory Board will meet on Thursday, just ahead of ICAC meeting on Sunday, to firm up the country’s cotton output forecast for 2012-13. The agriculture ministry has already projected a 5.1% fall in cotton output in 2012-13 to 33.4 million bales, as key producing reasons of Gujarat and Maharashtra received poor monsoon showers this year.
Lower supplies may drive up domestic prices, although industry executives said a fall in Chinese purchases may cap some gains. Still, such a scenario won’t be very conducive for large-scale exports.
