Global cotton prices are likely to remain under pressure even after India banned exports, a senior Australian farm official said on Tuesday, as more production comes on stream from other producing countries.
Benchmark cotton futures rallied more than 4% to close limit up on Monday, spurred by India's surprise ban on exports of its cotton.
"There is quite strong production coming from many countries. I think there will still be downward pressure on prices despite India not being around," said Paul Morris, executive director of the Australian Bureau of Agricultural and Resource Economics.
India stopped cotton exports with immediate effect on Monday to ensure supplies for domestic mills, boosting global prices some 4.5% as the absence of shipments from the world's second-largest producer might tighten a market facing weak demand.
Australia, typically the world's No. 4 cotton supplier, should be well positioned to take advantage of India's exit from the market.
The country's cotton exports are expected to soar 89% in 2011-12 to a record 955,000 tonnes, rising to 1.1 million tonnes in 2012-13, ABARES said.
India has already exported 9.4 million bales, the government said on Monday, higher than the projected export surplus quota of 8.4 million bales New Delhi had set in January, due to strong demand from China. Each bale is 170 kg.
This excess led India's Directorate General of Foreign Trade (DGFT) to ban shipments, to ensure steady supplies for the local textile industry, the country's largest employer after agriculture and which accounts for some 4% of GDP.
Benchmark US May cotton futures hit their highest level since February 29 after the announcement on Monday, erasing a fall of 2.13% last week which was driven by a stronger dollar and ample global supplies.
Prices in China, India's top customer and the world's largest user of the fibre, gained more than 1%.