Mumbai: Cotton exports from the country to China are outperforming US cotton exports to that country, says the latest report of the US Department of Agriculture (USDA).

Cotton exports from India have jumped nearly 25 per cent in 2006-07, with an estimated 62 per cent going to China, USDA said, adding, that India''s cotton production has almost doubled in the past five years.

With large exportable surpluses and low prices India has turned into a major exporter of cotton. India''s exports have been rising 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.

"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 per bale in January 2007," the report said.

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 added.

India is likely to produce more cotton in 2007-08 (October-September) with indications of more area coming under the crop in the north and use of genetically modified (GM) seeds. The country may produce 30 million bales in the coming season as against a production of 27 million bales in 2006-07.

Despite increase in production, prices may stay firm due to a buoyant domestic demand. Local prices were 5-9 per cent high this year over last year''s.

Exports are expected to be around 30-35 lakh bales this year as against last year''s 47 lakh bales because of a rising rupee and a drop in demand from China.

During the financial year ended March 31, production of cotton yarn increased 13.4 per cent. Cotton yields have also gone up this year from 478 kg per hectare to 501 and if area under cultivation increases in coming season the current yield levels will further raise production.

The East India Cotton Association estimates a 7-8 per cent rise in cotton prices next year. At present the price Shanker-6, a cotton variety, is Rs5,244 a quintal, while that of J-34 is ruling at Rs4,617.

Sowing in northern states (Punjab, Haryana and Rajasthan) have already started and in the next one month it will start in Gujarat, Maharashtra and Madhya Pradesh followed by southern states like Andhra Pradesh, Karnataka and Tamil Nadu.