Indian cotton exports likely to surge in 2011-12 season

12 Oct '11

2 min read

Cotton exports from India are likely to surge in October 2011-September 2012 season owing to several factors. India is the world's second-largest exporter of cotton and its exports are expected to be around 8-9 million bales (1 bale = 170 kg) this season, as against its exports of 7 million bales last season.

First, unlike last year, there are no restrictions imposed by the Government on export of cotton for this season. Last month, the Government had announced continuation of cotton exports without any limits in 2011-12 season. This is likely to contribute to a rise in cotton exports.

Second, sowing of cotton in the country has risen by 9 percent to around 12 million hectares this season on account of good monsoon. Compared to last season's production of 32.5 million bales, the Cotton Advisory Board has forecasted that India is likely to harvest a bumper crop of 35.5 million bales in the new cotton year beginning October 1, 2011. This would increase the amount of surplus cotton for export.

Third, a weak rupee would also act as a factor for increase in cotton exports. The Indian rupee has depreciated over 8 percent against the American dollar since September. This would automatically lead to lowering of price of Indian cotton in international markets.

In spite of surge in exports, however, sales realization from cotton exports is likely to remain limited. It is because of the bigger harvest in key cotton producing countries like China and Pakistan, which will increase stocks and bring down prices.

Last year, cotton inventory was reduced to a low level due to floods in Pakistan and China, where production declined drastically. This year, cotton production in Pakistan is expected to be around 2.27 million tons, compared to 1.91 million tons in 2010-11. Similarly, China's cotton production is likely to rise to 7.25 million tons, as against its production of 6.40 million tons last season.

Fibre2fashion News Desk - India

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