Output To Hit Record 35.5 Million Bales in 2011-12: Cotton board.

New Delhi: India will reap a record cotton harvest of 35.5 million bales in the marketing year starting from October 1 on higher planting and plentiful rains, but surplus stocks available for exports will still remain at current year’s level of 7 million bales due to rising domestic demand, a government-backed panel said on Tuesday.

The Cotton Advisory Board, comprising representatives of the ministries of textile and agriculture, various government departments and industry, has forecast an 11% rise in domestic consumption to 28.1 million bales in 2011-12, one of the Board members said. It projected the country’s total cotton supply, which includes crop output, imports and opening stocks, at 40.75 million bales in 2011-12, compared with 37.05 million bales in the current year, he added.

“Domestic consumption will rise as the textile mills will be looking for more and more of the raw material to boost exports,” said an industry executive. India is the world’s largest textile exporter after China.

Cotton planting rose 9% to 12.1 million hectares from a year earlier, as seasonal monsoon showers bridged an initial deficit in August, beating a government forecast of below-normal rainfall for the entire season that runs from June through September. Cotton sowing mainly resumes in June with the arrival of rains and is harvested from October. India, the world’s second-largest cotton grower as well as supplier, is estimated to have produced 32.5 million bales in 2010-11.

Opening stocks in 2011-12 are projected to rise to 4.75 million bales from 4.05 million bales a year earlier. Imports of select cotton varieties during 2011-12 will remain at the current year level of 5,00,000 bales.

Although the CAB has projected exportable surplus at 7 million bales, a senior government official said a ministerial panel will take a final call if shipments of the commodity will be capped in 2011-12.

Traders said the government shouldn’t curb cotton exports in 2011-12, as output is significantly high and textile mills, the largest consumers of domestic cotton, should compete with exporters for the purchases of the key raw material. Earlier this month, another government official had said cotton export may not be curbed from the beginning of 2011-12 as output is set to climb.

The government had kept an export ceiling of 5.5 million bales for 2010-11 before raising it to 6.5 million bales in early July and finally lifting the restrictions later in July until the end of the season as domestic prices had slumped from their record highs in March and April.

The prices were ruling around R36,500 per candy of 356 kg each on Monday, down from R61,500 per candy as of April 1.

Higher output will keep domestic supplies steady and prevent prices from spiralling out of control in 2011-12, analysts said.

However, demand for Indian cotton may soar again in 2011-12 as the U.S.--the world’s largest exporter--is expecting a 30% loss in its cotton crop due to a crippling drought in key producing region of Texas, they said. Indian cotton was in great demand in 2010-11 as the country reaped a bumper cotton harvest while other big producers such as China and Pakistan witnessed crop losses due to floods amid depleting stocks.

Source : financialexpress.com