This year, too, India will remain worldΆs top producer
Bales of freshly harvested cotton lie in floodwaters caused by Hurricane Harvey near Seadrift, Texas
Hurricane Harvey triggered a short-term rally in cotton prices following fears of extensive damage in the largest cotton-growing region of the US. As an immediate fallout of the bullish sentiment, cotton prices firmed up in recent trades in India and internationally.
However, analysts maintained that the devastation caused by the hurricane may not hurt the world cotton trade, as robust production is expected for 2017-18 globally.
Indian cotton in the spot market hovered around ₹42,300 per candy (of 356 kg), while internationally, ICE Futures for December contract hit 73 cents on Tuesday. On August 17, ICE December futures had quoted 67.19 cents.
Cotton trade experts maintained that the hurricane, which wreaked havoc in the cotton belt of Texas,may pose a threat to the fibre quality and hit production.
The International Cotton Advisory Committee (ICAC), giving out the latest global stock position, stated that cotton production in the US is forecast to increase by 20 per cent to 4.5 million tonnes. “However, the full impact of the recent hurricane in Texas, where around 45 per cent of US production occurs, is still under assessment,” it said projecting 2017-18 world cotton output at 25.1 million tonnes.
India will remain the worldΆs largest cotton producer in 2017-18, with a 4 per cent increase in output at 6 million tonnes. In China, too, production is expected to rise by 7 per cent to 5.2 million tonnes. PakistanΆs cotton production is projected to increase by 17 per cent to 2 million tonnes, ICAC stated.
On the Indian cotton scenario, Nayan Mirani, a cotton expert, stated that the US climatic eventualities will have a temporary impact on the cotton market.
“The hurricane impact will not be much as the US expects large crop this year. Also, other countries, including India, expect a good harvest thanks to good rains. As of now there is no major pick-up in demand, hence we donΆt see any sharp reflection of climatic adversities on the cotton prices,” said Mirani, adding that the prices will remain rangebound as India expects new cotton crop to start arriving from October.
Arun Dalal, a sector expert and market analyst, said cotton was experiencing short-term rally as a fallout of Harvey. “But the longterm outlook seems bearish from the current level as we expect robust crop on good monsoon. As the arrivals would begin in October, we expect prices to stabilise around ₹ 38,000 per candy in the spot market,” said Dalal.