Consumption of cotton up on better domestic demand

Cotton consumption in the country is set to rise on increased demand from domestic textile firms and rising exports of the fibre, US Foreign Agricultural Services attaché Santosh Singh said.

The forecast of domestic consumption was increased 3.2 per cent to 18.3 million bales for the year ending July 31, which is 1.7 per cent more than the US Department of Agriculture's projection of 18 million bales.

"Strong economic growth, rising consumer incomes, and an expanding middle class will continue to fuel growth in domestic demand for cotton textile products,'' Singh wrote in a report. "Indian cotton being the cheapest in the world, there has been strong export demand for cotton yarn and fabrics from the country.'' The Indian textile industry has been in rapid expansion mode, adding as many to 2.5 million new spindles every year, which is likely to continue this year, Singh wrote.

At the same time, exports will reach a record 4.3 million bales, up 2.4 per cent from attaché's previous projection, according to the report. The USDA has estimated exports will rise to 5 million bales from 3.45 million in the 2005-2006 year.

"India is expected to continue as one of the top three global exporters of cotton during the current season after being a net importer until 2004-2005,'' Singh wrote.

For the first half of the marketing year, the major export destination for Indian cotton was China, which made up 60 per cent of shipments, followed by Turkey, Pakistan, Bangladesh, Pakistan, Taiwan and Indonesia.

Production was maintained at 21 million bales, the attaché said. A bale weighs 480 pounds.

Cotton for May delivery fell 0.84 cent, or 1.6 per cent, to 53.05 cents a pound on the New York Board of Trade. Prices are down 1.6 per cent from a year ago.