Textile Industry Says: Cotton Output in India May Miss Forecast on Rains

The cotton harvest in India, the second-biggest producer and shipper, may be less than forecast if monsoon rains last longer than normal, according to the Confederation of Indian Textile Industry. Futures advanced. Production in the year from Oct. 1 may be less than the 32.55 million bales estimated by the Cotton Advisory Board last month, Confederation Vice Chairman Prem Malik said by phone from Mumbai. Output this year is estimated at 29.5 million bales, according to the board. An Indian bale weighs 170 kilograms.

Cotton is the best performer over the past year on the UBS Bloomberg CMCI Index, surging 47 percent. The most-active contract, for delivery in December, advanced as much 1.5 percent to 97.18 cents a pound on ICE Futures U.S. in New York today, the highest price since June 1995.

“If the rains persist, then definitely it’s going to affect the crop,” Malik said yesterday, without giving an estimate for the harvest. “The plants will not get the sunlight,” said Malik, 67, who also restated a call from the group for India’s cotton exports to be delayed from next month to January. India’s government plans to allow the export of as much as 5.5 million, 170 kilogram bales in the year from Oct. 1. Exports this year may be 8.3 million bales, according to an estimate from the Cotton Advisory Board.

India’s monsoon rains, the main source of irrigation for the nation’s 235 million farmers, normally draw to an end from September, the last month of a four-month season. Still, so far this September, rains are 122 percent of the 50-year average and clouds will begin to withdraw only by the end the month, the Indian Meteorological Department said on Sept. 14.

In the western state of Gujarat, the nation’s biggest cotton producer, rains were 54 percent above normal between June 1 and Sept. 15, according to the weather office. In Maharashtra, the second-largest grower, rains have been 25 percent more than average, it said. Global cotton inventories will fall to 45.4 million, 218 kilogram bales in the 12 months to July 31, the lowest level in 14 years, according to U.S. Department of Agriculture data.

Cotton futures may surge to $1.25 a pound by January as supplies dwindle, O.A. Cleveland, a professor emeritus in agricultural economics at Mississippi State University, said on Sept. 14. Prices may reach as much as $1.05 within six weeks because supplies are tight and demand is increasing, John Flanagan, president of Flanagan Trading Corp., said Sept. 15.

India will limit cotton exports to 5.5 million bales in the season from Oct. 1, with a “prohibitive” duty to be imposed on shipments above that level, Commerce Secretary Rahul Khullar said on Sept. 4. Textile Secretary Rita Menon said on Sept. 14 that India plans to delay registration of export contracts by two weeks until Oct. 1.
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