India's cotton exports may drop by 34% in 2012-13: USDA

India's cotton exports are expected to exceed the earlier estimate of 9.2 million tonne in 2012-13 marketing year ending July, but they are likely to remain down by 34% from the previous year level, a latest USDA report said.

The country had exported 14.17 million bales of cotton in the 2011-12 marketing year (August-July). One bale contains 170 kg of cotton, it said.

In its latest report, the US Department of Agriculture (USDA) said that it has upped India's cotton exports forecast to 9.2 million bales from 7.2 million bales for 2012-13 marketing year.

Till last month, "export registrations have reportedly reached 8.9 million bales with shipments surpassing 8.5 million bales for 2012-13," the USDA said in the report.

Exports in April were significantly lower at 2,00,000 bales as exports to China came to a near halt, it said.

As per the Cotton Advisory Board (CAB), India's cotton production estimate has been revised upward to 34 million bales for 2012-13. Earlier, it had pegged production at 26.5 million bales for the same period.

Till April, cotton arrivals had reached 29 million bales, almost even with the year-ago pace and 3% behind the 2010-11 pace, it said.

Cotton supplies in India are relatively comfortable at 8.8 or 11.2 million bales as of May 1, the USDA said analysing the supply-demand position using CAB data.

State-run Cotton Corporation of India (CCI) is currently holding 2.1 million bales of unsold stocks.

On April 26, 2013, CCI started the process of releasing the stocks by auctioning 25,000 bales. CCI and the textile industry have reportedly been seeking the release of the stocks for several weeks.

"However, initial interest in the auction was limited and CCI does not currently have permission to auction more than 25,000 bales," the USDA said.

Nearly all of the cotton is in Andhra Pradesh which is relatively close to the major textile area around Coimbatore in Tamil Nadu, but there are reported concerns about the quality of the CCI cotton, it said.

USDA warned that "the longer CCI hangs on to these stocks, the greater the likelihood that future auctions will depress prices just as farmers are making their 2013/14 cotton planting decisions."

While CCI maintained high procurement standards despite the damage from the late-season storm in Andhra Pradesh, the micronaire value is reportedly not as high as spinners would like, it added.