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Sunday August 15, 2010

Bloomberg

India Cotton Demand to Rise After Pakistan Floods, FCStone Says

August 12, 2010, 1:09 AM EDT

By Madelene Pearson

Aug. 12 (Bloomberg) -- Demand for cotton from India, the world’s second-largest producer and exporter, may climb after floods damaged crops in Pakistan, FCStone Group Inc. said.

“In light of the floods in neighboring Pakistan, the demand outlook for Indian cotton is increasingly bright,” FCStone said in a report dated yesterday.

Floods have destroyed 30 percent of the crop in Pakistan, the fourth-largest producer, the Kissan Board of Pakistan, a trade group, said this week. Cotton has risen 27 percent in the past year in New York and the price may trade around current “historically high” levels until at least the U.S. harvest at the end of the year, Olam International Ltd. said yesterday.

“According to local sources, the flooding in cotton- producing regions in Pakistan is prompting heavy inquiries from panic-stricken Pakistani traders,” FCStone said. “Indian spot markets are reported to be firm and active, owing to increasing demand from local and international buyers, especially from neighboring Pakistan.”

Cotton was little changed at 80.81 cents a pound in after- hours trading on ICE Futures U.S. at 9:40 a.m. Mumbai time. The futures reached 87.1 cents on April 26, the highest level since March 2008.

The United Nations appealed for $460 million in emergency aid to Pakistan as further rain, which is forecast, threatens to exacerbate the worst monsoon floods in the country’s history. Almost 700,000 hectares (1.72 million) of standing crops are underwater, the United Nations’ Food and Agriculture Organization has said.

Production in the U.S., the biggest exporter, may rebound this harvest to about 19 million bales from 12 million, Cliff White, a senior vice president at Singapore-based Olam, said yesterday at a conference in Australia.

--Editors: Ravil Shirodkar, Jake Lloyd-Smith

To contact the reporter on this story: Madelene Pearson in Mumbai on mpearson1@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net.

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