The Hindu Business Line : India to emerge as world's third largest cotton exporter

The global cotton situation for the oncoming 2006-07 season continues to turn increasingly producer-friendly with world production for the year almost certain to trail consumption as a result of which stocks would be further drawn down.

Little wonder, season average price is forecast to rise around 15 per cent.

Initial projections suggest an attractive increase in the season-average Cotlook A-Index for 2006-07 to 64 cents a pound, up from 56 cents in 2005-06.

World cotton output for 2006-07 is forecast at 24.7 million tonnes (mt), marginally lower than 24.8 mt of the previous year, according to Washington-based International Cotton Advisory Committee (ICAC).

Consumption, on the other hand, continues to rise year after year, spurred by global economic growth and increasingly seen driven by expanding usage in Asia led by China to fuel its cotton textile industry needs. China's consumption is expected to reach a whopping 10.5 mt in 2006-07, up 600,000 tonnes from the previous year, ICAC pointed out.

For 2006-07, global cotton consumption is projected at 25.9 mt (25.0 mt). Driven by Chinese import demand, world cotton exports have been rising and are projected to reach a new high of 9.5 mt. China's import requirement is pegged at 4.2 mt representing well over 40 per cent of world trade.

Conditions favourable

For India, domestic and international market conditions are favourable. The country is getting ready for a fairly large crop for the third season in a row. Area under Bt. Cottonseed is estimated at about 40 per cent of the total acreage, raising hopes of yet another bumper crop.

India could well become the world's third largest exporter of cotton, after USA and Uzbekistan next season. ICAC has forecast India's cotton exports in the ensuing season at 800,000 tonnes. In 2005-06, the country's exports were a little over 35 lakh bales (170 kg) and for the next season it could reach 50 lakh bales.

On current reckoning, cotton output could be anything between 240 lakh and 250 lakh bales. With opening stocks estimated at nearly 70 lakh bales, prices should normally tend to be under pressure.

However, large-scale exports are sure to provide adequate support to growers and prevent a price collapse. In order to ensure smooth exports and reap the benefit of favourable global market conditions, it is important to address logistics and infrastructure related issues without delay.

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