India cotten and products - update December,2007

Indian cotton production continues to increase, as the record 2007/08 crop will be even larger than expected.

The cotton production forecast has been raised to 23.9 million bales, based on the latest cotton market arrivals and crop condition reports in the major cotton growing states. Most growing areas received good rains during September, which has improved yields in the rainfed states.

Based on the latest planting estimates compiled by India's Ministry of Agriculture, the 2007/08 cotton area has been raised to 9.52 million hectares (Ha). Current production forecasts from multiple sources vary from 22.6 to 24.6 million bales.

The harvest is progressing well under ideal weather conditions in most states. Market arrivals of cotton through Nov. 24 are estimated at 6.2 million bales, compared to 4.6 million bales during the same period last year. Early season arrivals have been heavy due to relatively strong cotton prices and expectations of weakening prices to come.

The 2007/08 consumption forecast from USDA-FAS has been lowered to 19 million bales on weak export demand for cotton yarn and textiles due to the appreciation of Indian rupee vs. the U.S. dollar. Monthly estimates for cotton consumption by the local industry show a slowdown in the growth of cotton consumption. However, comparatively strong international cotton prices have raised export prospects for Indian cotton, which is among the cheapest cotton available on the global market.

Market sources report that about 2 to 2.3 million bales have already been contracted for export, mainly for China, Pakistan, Turkey, Bangladesh and South Asian countries.