Cotton harvest in India to tumble

The cotton harvest in India, the world’s second-biggest grower, is poised to decline as the worst monsoon since 2009 parches fields and curbs planting, potentially cutting exports for the first time in three years. Futures surged to a six-month high in Mumbai.

The crop in Gujarat, the largest producer, may plunge as much as 30 per cent in the harvest starting October 1 from 12 million bales of 170 kg each a year earlier, Hasmukhbhai Raval, chairman of the Gujarat State Cooperative Cotton Federation, said. The planted area in the state will probably slump by as much as 25 per cent from 3 million hectares in 2011-2012, he said.

Rainfall in some parts of Gujarat is as much as 81 per cent below a 50-year average as more than 50 per cent of India is threatened by drought. A smaller harvest would reduce exports, helping halt a decline in New York prices, which slumped 23 per cent in the past year as demand slowed in China.

“The outlook for the 2013 crop suggests global supply might be squeezed due to competition for acreage from crops like soybeans, and the weak monsoon in India,” Abah Ofon, an analyst at Standard Chartered Plc, said by email. “Output is being disincentivised at current price levels and we believe global supply will be lower next year.”

Global cotton production in the year that started on August 1 will drop to 24.878 million metric tons from a record 26.66 million tons in the year ended July 31, Birkenhead, UK-based industry researcher Cotlook Inc said on July 19.

The August-delivery contract on the Multi Commodity Exchange of India Ltd climbed as much as 1 per cent to Rs18,490 (Dh1,233) a bale in Mumbai.