Expect Cotton prices to trade steady to lower: Fortune Fin

Fortune Financial Services' special report on Cotton

Cotton Association of India has raised its estimate for India's 2013-14 (Oct-Sep) cotton output to 38.05 mln bales from 38.01 mln seen last month, as crop conditions have improved. The country had produced around 35.7 mln bales of cotton in 2012-13. The Cotton Association pegged carryover stock of cotton on Oct 1 at 4.3 mln bales and imports during the season at 1.5 mln bales. Carryover stocks and imports added to the next season's output of 38.0 mln bales would take total supplies in the country in 2013-14 to 43.8 mln bales, up from last year's 42.6 mln. Total demand in 2013-14 is estimated at 30.0 mln bales, which would leave a surplus of 13.8 mln bales next season.

China, the world's top cotton buyer, has imported 3.37 million tonnes of the fibre in the first 10 months of this year, a drop of 21.7 percent on the same period last year. Imports have declined this year after textile mills ran out of import quotas and turned to importing yarn instead of the cotton raw material. The imports (by China) will not be completely banned as very expensive raw material would push local textile industry in crisis. As a result, exports to China will take place but at much lesser extent.

Fundamental Outlook: Cotton prices are expected to trade steady-to-lower on supplies from the new season harvest and estimates of record crop amid slow demand for exports, though some buying from mills at lower levels is seen supporting prices.

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