Report Highlights:

India’s cotton exports jumped to an estimated 900,000 480 bales during November, of which 85 percent was destined for China. While farm prices remain relatively firm in rupees, ex-gin prices in dollars have dropped below the Cotlook A Index. 2013/14 exports are now expected 1.0 million 480 bales higher at 8.0 million bales. A major cyclone in the Bay of Bengal is expected to hit part of the major cotton producing state of Andhra Pradesh over the next few days. Heavy rains and wind could affect yields and/or quality. 2011/12 and 2012/13 consumption are estimated lower based on the revised estimate of non-mill consumption provided by the Cotton Advisory Board on November 1.

Arrivals Ahead of Last Year

On November 10, 2013, MY 2013/14 cotton arrivals, as counted by the Cotton Corporation of India, had reached 2.4 million 170 kg bales (1.8 million 480 lb bales/408,000 mt) compared to 2.0 million 170 kg bales (1.5 million 480 lb bales/343,000 mt) a year ago. The pace of daily cotton arrivals is relatively strong at 100,000 170 kg bales per day, but is expected to accelerate during December. Trade sources indicate that as of November 26 arrivals had crossed 3.0 million 170 kg bales. Farm prices in rupees have remained surprisingly firm with such a large crop in the offing. However, daily arrivals are expected to reach 250,000 170 kg bales per day starting in mid-December which is expected to push farm prices lower. Ex-gin prices in dollars have fallen and Indian cotton is now selling at a discount to the Cotlook A Index. As of November 26, the Cotton Corporation of India (CCI) was holding approximately 60,000 bales remaining of the 2.3 million 170 kg bales it procured in 2012/13.

Another Cyclone Threatens Andhra Pradesh

India’s cotton crop in the major-growing state of Andhra Pradesh is anticipating cyclone Lehar, the second potentially damaging cyclone of the season. While cotton growing areas evaded significant damage from cyclone Phailin earlier this year, cyclone Lehar could damage yields and/or quality. According to the Indian Meteorological Department, the cyclone is expected to hit coastal Andhra Pradesh by November 28. The government has issued advisories to postpone the second and third crop pickings and take measures for storing the harvested crop, and provide adequate drainage channels for cotton fields. The cyclone is expected to bring heavy to very heavy rainfall in the region with strong winds.

Cotton Advisory Board Lowers Non-Mill Consumption

India’s cotton consumption estimates are determined by combining monthly consumption in the small scale and non-small scale sectors as provided by the Textile Commissioner, along with the annual “loss” or non-mill consumption as determined by the Cotton Advisory Board. On November 1, 2013, the Cotton Advisory Board lowered the non-mill consumption data for MY 2012/13 by 1 million 170 kg bales (780,804 480 lb bales/170,000 mt) and 500,000 170 kg bales for MY 2011/12. As a result, consumption for MY 2012/13 has been reduced to 22 million 480 lb bales and MY 2011/12 to 19.3 million 480 lb bales to reflect the most current data.

Cotton Exports Off and Running

Cotton exports during November jumped to nearly 900,000 480 bales, 30 percent higher than November 2012, but about half of November 2011 exports which preceded the imposition of government export controls. Heavier arrivals and have pushed India’s ex-gin price below the Cotlook A Index. About 85 percent of the exports were destined for China. Prices are expected to drop further over the coming months. While much will depend on China’s import policies, a weak rupee, competitive pricing, and adequate supplies are expected to sustain interest in Indian cotton among foreign buyers and 2013/14 exports are now estimated at 8.0 million 480 lb bales.

Imports Expected Lower

Cotton imports were lower than expected during the first four months of the marketing year. MY 2013/14 exports are now estimated at 1.0 million 480 lb bales