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The scenario for cotton in the global market has turned further bearish with consumption by spinning mills seen rising by a meagre 1.6 per cent against an over 11 per cent growth in production this season that began in August.
According to estimates by Cotton Outlook, production this year is likely to increase to 26.93 million tonnes (mt) against 24.19 mt last season.
Consumption at the same time is seen rising to 23.92 mt against 23.52 million tonnes, a revised projection by Cotlook said.
Lower prices
Cotton prices are currently ruling at around Rs 40,000 for a candy of 356 kg. Prices are far lower from around Rs 63,000 a candy seen in April.
In the global market, cotton for delivery in December on the ICE ruled at a 2-week low of 99.72 cents a pound.
In fact, Cotlook's projections have been pruned from last month's projection. Last month, it had projected production at 26.96 mt and consumption at 24.39 mt.
Estimates have been revised lower as use of raw cotton by Chinese mills is seen lower. In fact, now it is seen lower than last year.
Chinese consumption
In 2010-11, Chinese mills consumption of raw cotton was pegged at 9.5 mt. Initially, this year's offtake was estimated at 9.9 mt but now, it has been projected at 9.4 mt.
On the other hand, production in China is expected to increase to 7.15 mt against 6 mt last year. However, the estimate is 0.1 mt lower than the one made last month.
India's production is seen at 6.12 mt or 360 lakh bales (170 kg each) against 5.52 mt or 325 lakh bales.
Consumption of raw cotton by spinning mills in India is seen at 7.50 mt or 441 lakh bales against 7.25 mt (426 lakh bales) last year. Pakistan's production, hit by floods last year, is seen higher this year to 2.08 mt (1.76 mt)
US AND BRAZIL
Production in the US is seen down at 3.55 mt (3.94 mt) as also in Brazil.
Cotton consumption in Turkey is seen up 50,000 tonnes but 50,000 tonnes lower in Brazil. In the US, consumption could also be lower at 0.83 mt (0.85mt) but in other user countries it could be higher at 4.11 mt (3.92 mt).
The end-season carryover stock is seen up at 3 mt against 0.65 mt last year.
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