Yields down in Punjab due to pest & bollworm

Indian cotton exports seen lower

GMT 12:43 2016 Thursday ,11 February

Sriyadithatextile - Indian cotton exports seen lower

Indian cotton - Bollworm infection
Courtesy Google

High rates of pest infection, dry weather, and a drop in planted area have reduced India's cotton production hopes, and helped cut hopes for strong recovery in exports.

The US Department of Agriculture's Mumbai office pegged at 5.2m bales Indian cotton exports in 2015-16, 600,000 bales below the USDA's official estimate.

Exports at the downgraded level would still represent an improvement on last season's 4.2m bales in shipments, a six year low.

However, they would be soft by the recent standards of an Indian cotton industry which has overtaken China as the top producer, and in 2011-12 exported 11.1m bales of the fibre.

Falling exports

"Even with a weaker Indian rupee, due to anticipated reductions in buying by neighbouring markets, exports are expected to be lower than the current official forecast," the USDA said.

The bureau warned that "exports to Bangladesh market may see a drop in the coming months as Bangladesh mills face liquidity issue".

And Pakistan is reaching the end of its "limited buying capacity" after covering its immediate shortfall.

Vietnam and China represent the other major export markets, the USDA said.

Pests hit output

India's 2015-16 cotton output was seen at 27.8m bales

This is down from an early forecast of 28.0m bales, and compares to 29.6m bales in the previous season.

"Yields are down in Punjab and Haryana due to a high incidence of sucking pest (white fly) and pink bollworm in Gujarat," the USDA said.

Production in Gujarat was also seen down due to heavy rains during planting, followed by a long dry spell during the key boll-formation stage.

And production in Karnataka was seen down due to a lower planted acreage.

Stockpiles accumulating

Even with the lower crop, farmers are holding onto stockpiles, in wait for higher prices, the USDA bureau said.

The government-run Cotton Corporation of India reported nationwide cotton arrivals at just 11.24m bales in 2015-16, the slowest rate for three years, and 30% behind last year's pace.

"Trade sources indicate that farmers are holding cotton in anticipation of higher prices," as well as the slow production, the bureau said.

With the slow pace of new crop arrivals, and with most of the 2014-5 stocks auctioned off, the CCI is holding just under 20,000 bales in stock.

Consumption falls

But domestic consumption ideas were trimmed by 200,000 bales as well, to 24.8m bales.

Mill consumption has been lagging last year's pace.

"Though mill consumption for 2015-16 could pick up," helped by government supports for the textiles sector, "the year-to-date consumption trend is down and it may be difficult to regain ground over the remainder of the season," the bureau  said.

Meanwhile imports ideas were trimmed by 200,000 to 800,000 bales.

But the bureau cited local sources as saying the Indian crop is facing quality issues, which means that specific grades could need to be imported to meet mill requirements

Demand for Australian new crop cotton, and high-grade US-grown pima remains strong.

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