World Cotton Output Likely To Decline

Mumbai: A slight dip in global cotton production, a 2 per cent increase in World consumption, lower ending stocks and a large increase in China's imports are likely to be the defining features of the 2007-08 cotton season. A strong upside risk to prices is indicated. The Cotlook A-Index is forecast to increase to season-average of 62 cents a pound next year, up from current year (9-month) average of 58 cents, according to the International Cotton Advisory Committee (ICAC). China's imports are projected to rise by one million tonnes (mt) to 3.9 mt in 2007-08, which could drive international trade by 9 per cent to 9.1 mt, the Washington-based agency said recently.
For 2007-08, world production is forecast at 25.1 mt (25.3 mt), while consumption is set to increase to 26.7 mt (26.1 mt). The global developments in terms of demand-supply fundamentals and prices are sure to benefit India. There is hope, subject of course to normal monsoon, that the country would produce 260-270 lakh bales of cotton (or even more) and leave 40-50 lakh bales as export surplus. Market arrivals for the 2006-07 season have reached around 253 lakh bales as at end-April, while export shipments are estimated at 40-41 lakh bales. Already 2 lakh bales have arrived, mostly from Egypt and the US. Over the next four months, southwest monsoon will play a critical role in shaping kharif crops including cotton.