Large Area Dry Weather Restricts India'S Cotton Output And Export Potential

According to the news from New Delhi on August 9, senior trade officials said on Thursday that a large area of drought in India's crop growing areas may affect the country's cotton output in 2012/13 and therefore affect it Cotton export Potential and limit domestic supply.

India is the world's second largest cotton producer.

Analysts expect dry weather to reduce India's cotton output by 10% - 15% in 2012/13.

In April this year, the Indian government has lifted all restrictions on cotton exports, because the country's cotton output in 2011/12 is expected to record a high of 34.5 million bales.

Strong demand from China and rising global cotton prices led to India's cotton exports climbing to a record high of 13.5 million bales, 170 kg per bale.

Dhiren Sheth, chairman of the Indian Cotton Association, said, "Cotton exports will be virtually suspended. At present, the planting of new cotton has ended."

As of August 3, the sown area of cotton in India has declined by 9% to 10.01 million hectares compared with the same period last year, which is mainly due to insufficient rainfall in Gujarat, the main cotton producing region.

Cotton planting in India usually starts from June and July, because the period is the beginning of the monsoon season.

Indian cotton crops are usually harvested in October each year.

Indian industry executives said that less rainfall would not only affect the cotton planting area, but also lead to a decline of 2% - 3% in cotton yield.

India Cotton Association Secretary General A Ramani said, "The dry weather will reduce the output of new cotton by 11-12%, or even by 15%."

Just two months ago, India's cotton price was 10% lower than the international market price, but now India's cotton price is 10-15% higher than the international price.

In the Indian market, Shankar cotton, the most actively traded cotton, is quoted at 40000 rupees per 356kg.

　　A. Ramani said, "If this drought situation continues, Indian cotton prices will continue to be higher than those in the international market, which will lead to a sharp reduction in Indian cotton export demand."

He said that it is expected that the Indian government may also introduce measures to restrict cotton exports in the coming months, so as to ensure domestic supply against the background of declining prospects for domestic cotton production.

He also said that at present, China's cotton demand has slowed down, because the government's cotton storage has ended, but it is expected that India's cotton exports will rebound again from October to November.

He said that China's cotton demand in the next market year will slow down because China's cotton production is expected to increase.

He also said that it is expected that the precipitation in India will increase from August, which will make the drought cotton Damage caused by crops is limited.