The cotton harvest in India, the second-biggest producer and shipper, may be less than forecast if monsoon rains last longer than normal in main growing regions, according to the Confederation of Indian Textile Industry.
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 in a phone interview. Output this year is estimated at 29.5 million bales, according to the board. An Indian bale weighs 170 kilograms.
The missed forecast may further tighten global supplies, stoking prices that have surged to the highest level in 15 years on slumping inventories and damage to the crop in China, the largest producer. U.S. mills have been “panic” buying, according to brokerage Varner Bros. in Cleveland, Mississippi.
“If the rains persist, then definitely it’s going to affect the crop and there could be a possibility of damage,” Malik said from Mumbai yesterday. “The plants will not get the sunlight,” Malik said.
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 1.1 percent to 96.81 cents a pound on ICE Futures U.S. in New York today, the highest price since June 1995.
Lower-than-forecast output may hurt India’s plan to export as much as 5.5 million, 170 kilogram bales in the year from Oct. 1. Global 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 on Sept. 10.
The Indian “textile industry will be stalled because the availability of raw material is not there,” said Malik. “Domestic prices are bound to be strong as arrival of cotton is not there because of rains.”
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.
‘In a Panic’
Rogers Varner, president of Varner Bros. in Cleveland, said yesterday that U.S. mills “have been in a panic” seeking supplies. “The higher the price goes, the more afraid the mills get and the more buying that they’re doing,” Varner said.
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 India plans to delay registration of export contracts by two weeks until Oct. 1. Exports this year may be 8.3 million bales.
The cotton crop in China is in worse condition this year than in 2009 after low temperatures and prolonged rains delayed planting and crop development, the Xinhua News Agency said Sept. 11, citing Ma Shuping, deputy director of planting at the Ministry of Agriculture. The nation will need to boost imports as the textile industry expands, Xinhua cited Ma as saying.
The USDA on Sept. 10 raised its estimate of China’s cotton imports in the 2010-2011 season to 2.776 million metric tons from last month’s forecast of 2.722 million tons as the production outlook weakened.