Cotton production in India, the world’s second-biggest grower, may exceed an industry estimate after the heaviest monsoon rain in three years prompted farmers to plant a record area, likely tempering global prices.
Output in the year started October 1 may reach 35.7 million bales of 170 kilograms each, the Cotton Association of India said in an e-mailed statement on Tuesday. That compares with 34.45 million the group forecast in September and 32.55 million predicted by the nation’s Cotton Advisory Board.
A bigger crop may help India ease restrictions on exports, likely pressuring a 78 per cent rally in global prices this year. Cotton reached $1.5195 on November 10, the highest since trading began 140 years ago, as adverse weather damaged crops in China, Pakistan and the US.
“The crop looks promising this year,” said Dhiren Sheth, president of the Cotton Association, a group of 400 growers, ginners, traders and exporters. “Though arrivals started late, they have caught up with figures of last year.”
Futures for March delivery advanced as much as 3 per cent to $1.382 a pound on ICE Futures US in New York on Tuesday.
Sales by farmers were 2.55 million bales as of October 31, the association said. Domestic demand may total 26.6 million bales, leaving a surplus of 15.25 million bales, the group said.
India’s textiles ministry October 11 halted registration of new export contracts after it got applications to export 5.5 million bales, the maximum permissible this year, in 10 days after bookings began. Louis Dreyfus Commodities, the top trader of cotton, and Cargill Inc. are among companies that won permits.