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Indian cotton exports likely to slacken by mid-December: USDA

12 Dec 2011 Evaluate

The US Department of Agriculture (USDA) has reported that India’s cotton exports may get slowed by mid-December on demand uncertainty in major consuming countries, especially China. The executive department of US, responsible for developing and executing US federal government policy on farming, agriculture, and food has also revised India's export forecast downward by 5,00,000 bales to 7.5 million bales of 170 kg each for the 2011-12 season (October-September). However, it kept unchanged the cotton production forecast for the country at 35 million bales for the current season.

According to the USDA, India’s “export registrations may slow around mid-December as exporters await greater clarity about tariff levels and interest from China“. There is a degree of uncertainty to India’s export prospects because there could be an increase in tariffs in China from January 1, 2012, and there is no surety about China’s buying plans, it said.

The USDA report also said India’s cotton is getting sold at a discount from other origins in the wake of devaluation of rupee against dollar over the past few months, though it is still trading above minimum support price. It observed that the Cotton prices have dropped in recent days, suggesting that the pace of arrivals is beginning to accelerate. However, despite the anticipated record crop, cotton arrivals continue to lag behind the 2010-11 pace due to the late onset of harvest and presumed holding of cotton by farmers hoping for higher market and support prices.

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