Cane, Cotton Harvests in India May Be Held Up by Excessive Rain

Cotton and sugar cane harvests in India, the second-biggest producer of the two commodities, may be delayed because of an extended monsoon season, tightening global supplies and bolstering prices, industry officials said.

The monsoon, the main source of irrigation for India’s 235 million farmers, may beat a previous forecast as the withdrawal of the rain-bearing clouds has been delayed, the weather bureau said today. That’s hindered cotton harvests, pushing up domestic prices to a record, said D.K. Nair, secretary general of the Confederation of Indian Textiles Industry.

A delay in Indian harvests may fuel gains in cotton prices, which reached a 15-year high this week on concern that crops in the U.S. and China are being damaged by heavy rain. Sugar prices have surged 67 percent since reaching a 13-month low on May 7 on rising demand from Asian buyers and speculation that dry weather will lower production in Brazil, the biggest producer.

“Cotton has caught fire in India as there’s a delay in arrival of fresh crops,” Nair said from New Delhi. “If rains continue for another two weeks, it could even lower the nation’s output.” Production may be a record 32.5 million bales.

Prices of Shankar-6, a medium staple cotton variety, jumped to 38,000 rupees per candy yesterday after rains delayed arrival of crops, Nair said. A candy weighs 355 kilograms.

Cotton futures in New York reached 91.18 cents a pound on Sept. 7, the highest closing price in 15 years. The December- delivery contract settled at 90.56 cents yesterday.

India will resume registration of cotton shipments starting Sept. 15, the Textiles Commissioner said yesterday. Exports will be capped at 5.5 million bales in the year starting Oct. 1. China is the top buyer of Indian cotton.

Retreat

The rainfall may be as much as 103 percent of the 50-year average as the monsoon weather system may begin to retreat from northwest parts of the country only from the third week of this month, Ajit Tyagi, director general of the India Meteorological Department, said from New Delhi. The monsoon normally draws to an end starting September, the last of the four-month season.

Gujarat, Maharashtra and Madhya Pradesh, the main cotton, sugar and soybean-producing states, may get heavy rains until Sept. 12, the weather bureau said.

Sugar cane-processing in Maharashtra, the nation’s biggest producer, may be delayed, Prakash Naiknavare, managing director of the Maharashtra State Cooperative Sugar Factories Federation Ltd., said Sept. 7. Mills may not begin crushing from Oct. 1 as planned if rains continue, he said.

“Prospective buyers of Indian sugar will have to wait if there’s a delay in crushing,” said Nirmal Shah, an analyst at Alchemy Share & Stock Brokers Pvt. Still, the “continued rains may increase overall yield and output.”

India’s sugar output may be 26 million tons in the season starting Oct. 1, eight of 10 producers, traders and consumers said last week in a survey. The country may ship as much as 2 million tons in the 2010-2011 season, Yatin Wadhwana, managing director of Sucden India Pvt. said Sept. 2 in New Delhi.

--Editor: Ravil Shirodkar.

source: businessweek