Low stocks 'to extend' India's cotton export curbs
Saturday, 7 April 2012
NEW DELHI, April 6(Internet): There is a risk that India's cotton export ban could remain in place for the rest of the marketing year, and could be succeeded by curbs in 2012-13, US farm officials warned, flagging the tightness in the country's supplies.
It is "not clear" if the ban imposed last month on cotton shipments from the world's second-ranked exporter will be lifted before the end of the current season, in September, "or if there will be new export control measures in 2012-13", the US Department of Agriculture 's New Delhi bureau said.
But it "seems likely that the current ban will be in place for much of the current marketing year", given a slump in inventories.
And, curbs or not, exports will reach only 4.7m bales in 2012-13, the lowest in nearly a decade, the bureau forecast in a report.
"The government is expected to continue to try and ration the volume of exports," the briefing said.
"India is expected to continue as an exporter, but exports will likely continue to be managed unless cotton prices come down significantly."
The comments reflected an assessment that, thanks to the bumper pace of exports early in 2011-12, India, the second-ranked cotton producer, would end the year with inventories of less than 5.0 billion bales, a reduction of nearly one-quarter year on year.
Related to consumption, to form the stocks-to-use ratio, a key measure of availability, supplies will "drop to one of their lowest levels of at least the past 20 years", given rising levels of consumption too.
The stocks-to-use ratio will actually fall to 25.1 per cent the second smallest figure since easily accessible USDA records begin in 1960.
It will recover only modestly to 27.6 per cent in 2012-13, still a historically low estimate.
India's inventory position is being worsened by a dearth of stocks at mills, who are being hampered from building up supplies by difficulties in obtaining credit.
The spinning industry in India, and other countries, suffered heavy losses from the ramp up, and subsequent plunge, in cotton prices last season.
"Skittish lenders continue to be reluctant to provide operating capital to spinning mills following the losses many mills incurred during 2010-11 due to volatile market conditions," the bureau said.
Mills which "under less-strained financial conditions" could be expected to carry up to five moths' stocks had enough to cover "a few weeks to two months of use".
In 2012-13, supplies are also set to be weakened by a 2.5 million bale drop, to 25.2 million bales, in production, thanks to a drop in sowings.
In part the drop in area will reflect the attractive returns offered by alternatives such as corn, peanuts and soybeans.
It is "not clear" if the ban imposed last month on cotton shipments from the world's second-ranked exporter will be lifted before the end of the current season, in September, "or if there will be new export control measures in 2012-13", the US Department of Agriculture 's New Delhi bureau said.
But it "seems likely that the current ban will be in place for much of the current marketing year", given a slump in inventories.
And, curbs or not, exports will reach only 4.7m bales in 2012-13, the lowest in nearly a decade, the bureau forecast in a report.
"The government is expected to continue to try and ration the volume of exports," the briefing said.
"India is expected to continue as an exporter, but exports will likely continue to be managed unless cotton prices come down significantly."
The comments reflected an assessment that, thanks to the bumper pace of exports early in 2011-12, India, the second-ranked cotton producer, would end the year with inventories of less than 5.0 billion bales, a reduction of nearly one-quarter year on year.
Related to consumption, to form the stocks-to-use ratio, a key measure of availability, supplies will "drop to one of their lowest levels of at least the past 20 years", given rising levels of consumption too.
The stocks-to-use ratio will actually fall to 25.1 per cent the second smallest figure since easily accessible USDA records begin in 1960.
It will recover only modestly to 27.6 per cent in 2012-13, still a historically low estimate.
India's inventory position is being worsened by a dearth of stocks at mills, who are being hampered from building up supplies by difficulties in obtaining credit.
The spinning industry in India, and other countries, suffered heavy losses from the ramp up, and subsequent plunge, in cotton prices last season.
"Skittish lenders continue to be reluctant to provide operating capital to spinning mills following the losses many mills incurred during 2010-11 due to volatile market conditions," the bureau said.
Mills which "under less-strained financial conditions" could be expected to carry up to five moths' stocks had enough to cover "a few weeks to two months of use".
In 2012-13, supplies are also set to be weakened by a 2.5 million bale drop, to 25.2 million bales, in production, thanks to a drop in sowings.
In part the drop in area will reflect the attractive returns offered by alternatives such as corn, peanuts and soybeans.