India Cotton Exports Seen up 17% Over Govt f’cast .

MUMBAI: India’s cotton exports could rise 17 percent, or 1.4 million tonnes, over an official forecast in the year to September 2012, spurred by a record harvest, a weaker domestic currency and a freer trade policy, the top exporter of the fibre said.

India contributes 22 percent of global output and is expected to have a bumper harvest of 6.14 million tonnes, pushing it into competition with suppliers from Latin America, Australia and Africa that will squeeze world prices.

The world’s second biggest grower and exporter of cotton has said it will continue with unrestricted exports in the new marketing year from October 1, which would be a key factor in dictating fibre prices in the 2011-12 season.

“This year’s crop seems to be good,” Parth Mehta, joint managing director of Bhadresh Trading Corporation, which shipped about 250,000 tonnes of cotton in the fiscal year that ended in March, told Reuters.

“The government has also liberalised cotton export for the next season.” Taken together, these factors could help push India’s exports of cotton in the next season to nearly 8.2 million bales, or 1.4 million tonnes, he added. India’s domestic demand is pegged at nearly 4.8 million tonnes in the year to September 2012, up nearly 12 percent from 4.3 million tonnes the previous year.

Exporters say higher productivity could help push the cotton exports figure past a government estimate of 1.2 million tonnes, which was based on last year’s productivity figures.

“With over 90 percent of the country’s cotton growing area under BT cultivation, productivity could be higher,” said Mehta, referring to a gene-modified cotton variety that has resulted in larger yields.

Chinese demand: The stronger dollar will also help. India’s partially convertible rupee currency touched a two-year low of 48.24 to the dollar on Tuesday and remains the worst performer amongst the 10 major Asian currencies, having weakened by more than 7 percent so far this year.

Further impetus could come from the appetite of major consuming countries such as China, which had lower inventories following record prices in March and uncertainties over supplies following bad weather in key producing regions.

Demand for Indian cotton is expected to be strong from countries such as China, Mehta said, because output from the United States, the biggest exporter, is likely to decline.

In March, prices touched a record high of $2.27 per lb, driving Indian prices to an all time high of $1.75 per lb. Since then both global and domestic Indian prices have halved on higher supplies from Latin America and Africa.

“Earlier Chinese companies were maintaining reserves for six months and now it has gone down to 15 days. They have to replenish their stocks which will create enough demand,” Mehta said.

The demand from China in the 2011-12 season, which begins in August, is seen stable at 10.1 million tonnes, accounting for 40 percent of global consumption, USDA data showed.

But traders say Indian cotton will fetch lower prices because the government’s fickle export policy, hostage to its aim to ensure sufficient domestic supplies, has scared off buyers seeking reliable sources. reuters

Source : dailytimes.com.pk