The Hindu Business Line : Deals signed to export 4.5 lakh cotton bales

COTTON traders have signed contracts to export at least 4.5 lakh bales (of 170 kg). Of this, at least deals for one lakh bales have been signed with the spinning mills in Pakistan.

"Another 50,000 bales are likely to be shipped to Bangladesh, while about three lakh bales will head towards the South-East and Far-East," trade sources told Business Line.

For the first time in several years, the Pakistan spinning mills are accepting Indian cotton as it is seen as a cheaper source. Higher domestic prices back home and fears of crop shortage have resulted in these mills contracting cotton from the country.

"The Pakistan mills are buying Shankar-6 and Bunny variety cottons," the sources said. While Shankar-6 has been contracted at 68.5 US cents per pound f.o.b (about Rs 68,650 per tonne), Bunny has attracted 72.4-74 cents a pound (Rs 72,700-74,200 a tonne).

"These medium staple cotton varieties are being sent by ship from Mumbai or Kandla to Karachi," they said.

Among other nations that have shown interest in India cotton is Taiwan.

Pakistani mills are looking to source their needs from abroad since Islamabad's crop is seen lower at 100 lakh bales, down from 105 lakh bales last year. According to reports, it could be even less at around 95 lakh bales. Against this, the demand is forecast at 115 lakh bales.

On the other hand, Indian cotton production is seen topping 175 lakh bales, up from 135 lakh bales last year in view of bountiful rains and congenial climate. This has led to a situation wherein imports will be less at around eight lakh bales against 16 lakh bales last year. Prospects of exports too are looking good.

Countries in the Far-East and South-East are looking to India for sourcing their cotton needs in view of competitive prices and lower freight charges.

Though domestic prices are ruling higher than last year, they are seen lower than global prices, which are ruling higher in view of projections of lower carryover stocks during 2003-04 (October-September).

Despite global cotton production seen up by one million tonnes, carryover stocks are estimated to be lower by four lakh tonnes.

The average global prices increased to 74-77 cents per pound (Rs 74,200-77,200 a tonne) in November against 48-52 cents per pound (Rs 52,000-56,000 a tonne). In the domestic market, Shankar-4 is currently being quoted around Rs 63,764 a tonne against Rs 52,000 a tonne last year.

"Our exports can cross eight lakh bales if our Government opens the land route to Pakistan," the sources said.

Trade from both nations is looking forward to thawing of the strained relations, especially after the attack on Parliament by a group allegedly owing allegiance to Pakistan.

However, since the second half of this year, both the nations have begun to make positive moves in resuming bilateral relations. While bus services between the two nations have begun, airline services are set to start from January 1. Rail services will begin from January 15.

More progress is expected during the South Asian Association for Regional Cooperation meeting in Islamabad next week when the Prime Minister, Mr Atal Bihari Vajpayee, and the Pakistan President, Gen Pervez Musharaff, are expected to meet.

"We would like the Wagah border to be thrown open to trade on both sides. It will help both the nations," the sources said.

According to trading sources, there is market preference for Indian cotton currently as the US cotton is suffering from stickiness due to honey dew problem. "There is no such problem with Indian cotton," they said.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Big jump in area under scampi: Study

Cotton futures may consolidate

Deals signed to export 4.5 lakh cotton bales

Oilseeds: Indiscriminate MSP hike not desirable

Ginger prices soar on short supply

Farmers' bodies call for partnerships to fight globalisation

APEDA member nominated