(Adds analyst comment in sixth paragraph.)
Jan. 5 (Bloomberg) -- Cotton production in India, the world’s second-biggest grower, will be less than forecast after unseasonal rains areas cut yields, a textile-mill group said.
The harvest may reach 32.5 million bales to 33 million bales of 170 kilograms each in the year that started Oct. 1, D.K. Nair, secretary-general of the Confederation of Indian Textiles Industry, said in a phone interview from New Delhi. That compares with 35.6 million bales estimated by the Cotton Advisory Board on Nov. 15 and 34.5 million bales predicted by the U.S. Department of Agriculture on Dec. 31.
A smaller Indian crop may support in prices, which slumped 56 percent from a record $2.197 per pound on March 7 in New York on expectations of bigger global harvests. Global production will be a record 123.42 million bales of 218 kilograms each this crop season, the USDA said on Dec. 9.
“Although the area is higher, yields have come down because of bad weather,” Nair said yesterday. “There has been some crop loss in Andhra Pradesh because of rains and there were problems in Maharashtra.”
The area under cotton climbed 9.9 percent to 12.2 million hectares (30.1 million acres) from a year earlier, according to the board. Maharashtra and Andhra Pradesh states are the second- and third-largest growers.
“Prices will see some upside on lower Indian output, but gains will be capped as production globally is on the higher side,” Vandana Bharti, vice president for research at SMC Comtrade Ltd., said by phone from New Delhi.
Cotton for March delivery was little changed at 95.80 cents a pound on ICE Futures U.S. in New York at 3:03 p.m. in Mumbai. Futures slumped 37 percent last year, the most since 2004.
Overseas sales may be about 8 million bales this year, 14 percent higher than a year earlier, after the government freed exports, Nair said.
“There is good export demand from China as it’s building reserves,” he said. Exporters may have registered with the trade ministry to ship 4.4 million bales since Oct. 1, he said.
China’s imports may climb to 3.3 million metric tons in the year ending July 31 from 2.7 million tons a year earlier, Terry Townsend, executive director of the International Cotton Advisory Committee, said on Nov. 7.
“China is looking to build its reserves in most commodities and may boost Indian purchases when the new crop arrivals pick up around March-April,” Vimala Reddy, analyst at Karvy Comtrade Ltd., said from Hyderabad. A decline in the Indian currency to a record last month may keep some buyers away, she said.
India’s rupee was Asia’s worst performer last year, reaching a record low of 54.305 a dollar on Dec. 15.
--Editors: Thomas Kutty Abraham, James Poole
To contact the reporter on this story: Swansy Afonso in Mumbai at firstname.lastname@example.org
To contact the editor responsible for this story: James Poole at email@example.com