Cotton Output in India May Miss Estimates as Rains Hurt Yields.

Jan. 5 (Bloomberg) -- Cotton production in India, the world’s second-biggest grower, will be less than previously forecast after unseasonal rains in some growing regions reduced yields, a textile mills group said.

Output may total 32.5 million bales to 33 million bales of 170 kilograms each in the year that started Oct. 1, D.K. Nair, secretary-general of the Confederation of Indian Textiles Industry, said in a phone interview from New Delhi yesterday. That compares with 35.6 million bales estimated by the nation’s Cotton Advisory Board on Nov. 15 and 34.5 million bales forecast by the U.S. Department of Agriculture on Dec. 31.

A smaller Indian crop may help a rebound in prices, which have slumped 57 percent since reaching a record $2.197 per pound on March 7 in New York on expectations of a bigger global harvest. India produced 32.5 million bales in 2010-2011, according to the board.

“Although the area is higher, yields have come down because of bad weather,” Nair said. “There has been some crop loss in Andhra Pradesh because of rains and there were problems in Maharashtra also.”

The area under cotton in India climbed 9.9 percent to 12.2 million hectares (30.1 million acres) this year from a year earlier, according to the board. Maharashtra and Andhra Pradesh states are the second- and third-largest growers.

Exports from India this year may be about 8 million bales this year, 14 percent higher than a year earlier, Nair said.

Chinese Demand

“There is good export demand from China as it’s building reserves,” he said. Exporters may have registered with the trade ministry to ship 4.4 million bales since Oct. 1, he said.

China’s imports may climb to 3.3 million metric tons in the year ending July 31 from 2.7 million tons a year earlier, Terry Townsend, executive director of the International Cotton Advisory Committee, said on Nov. 7.

Cotton for March delivery fell as much as 1 percent to 95.01 cents a pound on ICE Futures U.S. in New York today. Futures slumped 37 percent last year, the most since 2004.

Sales by farmers in India fell 24 percent to 10.14 million bales as of Dec. 31 as arrivals from Gujarat, Maharashtra and Andhra Pradesh lagged behind year-ago levels, the Cotton Corp. of India, the nation’s biggest buyer said yesterday.

“Farmers have been holding back stocks in anticipation of better prices, but they cannot hold the stocks permanently, so arrivals will pick up soon, bringing down prices,” he said.

Cotton in India, which climbed to a record 63,000 rupees per candy (356 kilograms) in February, has slumped to 35,300 rupees as of Jan. 2, according to the Cotton Association of India.

Source : businessweek.com