World cotton output to dip slightly by 5%
Post Date: 12 Sep 2013 Viewed: 354
World cotton output is estimated to have declined around 5.0 percent from 279 million tonnes last year to 269 million tonnes in 2013 as growers switched to other cash crops.
Rains and heat waves in major cotton producing countries are responsible for slightly lower production, said fibre analysts.
However the fundamentals for cotton futures are up more than any other commodity this year besides lint prices would also remain on the higher side as compared to 2012, according to a technical analysis. Cotton output in China, the world’s biggest producer could drop this year amid heat waves across much of the country.
Fears of decreased global production of cotton and increased buying by China following its greater than before cotton purchase programme have also increased global cotton prices.
Recent monsoon rains have hit cotton quality slightly, thus causing increase in prices and following delayed arrivals of cottonseed from the current crop August 2013 to July 2014 due to continuing rains and floods, domestic lint prices have reportedly risen by Rs 200 to Rs 350 per maund to Rs 7,000 per maund within a week.
Slow supply of cottonseed to the ginneries due to dilapidated road structure in many parts of cotton-growing areas also contributed to the flare-up in prices.
The textile sector would have to face quality and tight supply of lint besides slightly higher price of produce. After holding to values near 85 cents per pound for the past one month, the most-actively traded US December futures contract increased to levels between 93 cents per pound. The A Index increased slightly, rising from values near 91 to around 96 cents per pound.
Chinese prices were stable in international terms (142 cents per pound). Spot prices for the Indian Shankar-6 variety increased in both local (from Rs 42,800 per candy to Rs 44,500 per candy) and international terms (from 91 cents per pound to 93 cents per pound).
Pakistani spot prices have also increased by Rs 250 per maund to Rs 6,750 per maund with strong physical prices around Rs 7,050 per maund.
Expectations for the 2013-14 crop dropped 1.6 million bales from 118.0 million to 116.4 million. At the country-level, the largest change was made to the Chinese forecast, which decreased by 1.0 million bales (from 34.0 million to 33.0 million).
Other important downward revisions to 2013-14 production figures were for the US (-447,000 bales, to 13.1 million), Uzbekistan (-250,000, to 4.3 million) and Zimbabwe (-100,000, to 400,000). The only significant upward revision was for Pakistan (+200,000 bales, to 9.7 million).
Chinese officials indicated Chinese cotton policy would be revised before the onset of the 2014-15 crop year. Since Chinese import demand could slow with the eventual changes, the announcement could be accompanied by downward pressure on prices. In 1784, the US exported its first load of cotton to London. Weighing 400 pounds in eight bags, British authorities declared it contraband because they believed the US could not have produced that much cotton.