"Since becoming a significant exporter last year, with cheaper freight rates and lower cost of production, India has consistently under-priced US cotton to Far East ports like China. That price differential swelled to a high of 32 dollar per bale in January 2007," the report said.
The large exportable surpluses and low prices have turned India into a major exporter, the report said. The cotton exports of India have jumped nearly 25 per cent in 2006-07, with an estimated 62 per cent going to China, it said.
India's cotton production has almost doubled in the past five years and its cotton exports have also risen sharply in the past few years, the report added. In contrast, US cotton exports are expected to decline by 28 per cent to 13 million bales this year from 18 million bales last year with less demand overseas.
With stocks estimated to jump by a whopping 62 per cent to 9.8 million tonnes, cotton prices in the US have dropped by 35 dollar per bale in recent months. The current cotton price in the US puts them below India's price to China CIF for the first time in more than a year, it said.
"Continuation of that price relationship could make the US more competitive in world markets, vis-a-vis India, in the future," USDA said. The report also said Chinese cotton imports may be down by 40 per cent at 11.75 million bales this year.
