Global cotton output set to dip this year: Ncdex

Global cotton production is likely to decline this year, even as consumption is expected to rise, according to a report published by the knowledge management department of the National Commodity and Derivatives Exchange (Ncdex).

World cotton output for 2005-06 is estimated at 24.45 million tonne, much below the all-time high of 26.22 million tonne achieved last year.

The Ncdex report estimates an increase in output in the US and Uzbekistan and a fall in crops in China, Pakistan, Brazil and Turkey. Global consumption is expected to see a year-on-year rise of 5.5 per cent to 25 million tonne from 23.7 million tonne in 2004-05.

"The projected increase in global cotton consumption has been driven by increase seen in demand in China, India and Pakistan," said the report.

With production estimated to lag behind consumption, prices seem to be gaining in anticipation.

"Contracts sold on the Ncdex platform, however, indicate a contango market. Futures prices ruled over spot prices and moved between a low of Rs 1,490 rupees per maund (1 maund=36.8 kilograms) to a high of Rs 1,944 (per maund)'', the report said.

As most nations have carry-over stocks, it will help in meeting the rising demand and curb the rise in prices. While globally, carry-over stock for the next year is likely to decline slightly from 11.2 million tonne in 2004-05 to 11 million tonne, the report projects a rise in carry-over stock in India, US and Uzbekistan.

In India, the carry-over is expected to rise to 2 million tonne, from 1.8 million tonne in 2004-05. Global imports are projected to increase to 9 million tonne, from 7.2 million tonne in 2004-05.China, where domestic supply meets only 50 per cent of the total demand, is seen driving global imports data in 2005-06.

The US, which accounts for about 39 per cent of the total exports, is likely to remain the single biggest exporter. India is likely to see a gain in its stature as an exporter, with exports likely to see a 157 per cent rise to 392,000 tonne, from 152,000 tonne in 2004-05, the report added.