World cotton market fundamentals are turning in India's favour. Given bright crop scenario, India's cotton export prospects too are beginning to brighten. Growers are likely to benefit from the evolving market conditions.
Consider this. For 2009-10, world consumption is projected at 23.6 million tonnes (23.1 mt previous year) while production is estimated lower at 23.1 mt (23.4 mt). Ending stocks are projected to deplete to 11.8 mt (12.3 mt).
World exports are poised to bounce back modestly to 6.9 mt (6.6 mt).
According to the International Cotton Advisory Committee (ICAC), while consumption is expected to recover slightly because of recovery in global economic growth, output is projected to decrease, especially in China, world's largest cotton producer, consumer and importer.
China's imports are projected to rise by eight per cent to 1.6 mt in 2009-10. Imports into Pakistan, Bangladesh, Turkey, Indonesia, Thailand and Vietnam are also expected to increase.
Simply put, export window for Indian cotton has widened. ICAC has projected Indias cotton exports could rebound to 1.4 mt in 2009-10 season.
ICAC forecast
Based on its price model, ICAC has forecast a season-average Cotlook-A Index of 64 cents pound (the 95 per cent confidence interval is between 56 cents and 73 cents), up from 61.2 cents in the previous season.
Traders told Business Line that that export contracts for close to 10 lakh bales have already been signed. Export prices range between a low of 58 cents and a high of 63 cents at present. On current reckoning, shipment of up to 50 lakh bales looks a distinct possibility.
The crop is size is variously estimated between 290 lakh and 310 lakh bales. Cotton is one large crop that has fortunately escaped the adverse effects of a bad monsoon.
Market arrivals usually peak during December/January. So, there would be one more year of sizeable exports. Over the last three years, exporters have successfully established Indian cotton in the overseas markets.
Source : moneycontrol.com