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G. Gurumurthy

Coimbatore, May 6 The Cotton Advisory Board (CAB) scheduled to meet on May 16 may give some clue on the pace of exports of cotton, which is blamed for the current uptrend in the domestic cotton prices.

Textile trade and industry sources here said the CAB meet which is likely to come out with the cotton balance sheet for the 2007-08 season based on the demand and supply situation is also expected to set the cotton export target. This may also broadly indicate the realistic assessment on the volume of exports that is possible this year.

Originally, cotton exports this year are estimated to be around 65 lakh bales (of 170 kg), the same as last year and so far, the physical shipments made are estimated somewhere between 44 and 50 lakh bales, though the exports remained sluggish in the last two moths.

Domestic spinners said most key cotton varieties this year were quoting prices 20 per cent higher than what they were at the beginning of the season six months ago and the bumper crop of 310 lakh bales projected to be harvested this year has not come to their benefit in terms of cheap raw material, mainly on account of large volume coverage of cotton at the beginning of season by export trade. The domestic textile industry’s reading is that the yarn converted from such high cost cotton will be un-remunerative.

China stated to be an aggressive buyer of Indian cotton, especially the Shankar-6 variety, early in the season is said to have turned slow of late in buying Indian cotton ever since the slow-down in China’s textile industry. China’s textile exports to the US market this year are described as bearish with its internal costing becoming higher. China is also said to be not that keen to buy cotton from India because it finds the current Indian cotton prices are costlier and is rather keen to source it from West Africa.

The meeting of CAB this month will be, according to Mr K N Viswanathan, Secretary of South India Cotton Association, crucial as the total arrival of the new crop will be hitting close to the 300 lakh bales level, against the anticipated total crop size of 310 lakh bales, by the time the meeting is on. With the daily arrivals of lint cotton into the market dwindling to 25,000 bales, so far the cumulative arrivals estimated as on last month end is 293 lakh bales.

With a felt deceleration in China’s textile exports, many in the industry are betting on India’s textile sector gaining additional share in exports this year. Viewed from the trade input that about 15 to 20 lakh bales of cotton are still to arrive and an equal volume of cotton (another 20 lakh bales) held by the local cotton trade/multinational cotton trade, the cotton scenario may put some action into domestic textile value chain reworking their cotton purchase plans. After all the raw cotton consumption by the industry overall has not indicated any steep fall this year, the trade sources say.

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