Spinning mills in the country have contracted to import 10 lakh bales (170 kg) of cotton from African countries following tight domestic availability and delayed monsoon.

The supply squeeze is owing to lower stocks with growers. Delayed monsoon has led to fears of drop in acreage and production of cotton. Besides, parched US crops have prompted millers in the country - world's second-largest cotton exporter - to import more.

Nine-year high imports

The country’s cotton imports may scale a nine-year high of 15 lakh bales in the cotton year ending September, thanks to record exports of around 135 lakh bales - or 39 per cent of output - so far.

Imports have already touched 10 lakh bales, compared with the Cotton Advisory Board’s (CAB) projection of 6 lakh bales for the entire 2011-12 season. The country had imported 5 lakh bales last year.

Although India usually imports some high-grade cotton varieties in small volumes from Egypt and the US, this year mills are purchasing even coarser or short-staple varieties. Textile firms now prefer short-stapled varieties (mainly used in making denim cloth) from African nations such as Tanzania, Zambia and Zimbabwe.

“Although short-stapled ones (which is of little use in India), these are imported mainly because of cheaper prices and are free of contamination. So textile firms plan to use imported cotton to ramp up their output and to spin coarser yarns,” Mr Ashok Damji Daga, a Coimbatore-based cotton trader and Member of CAB, told Business Line .

Stocks depleted

Textile industry sources said large volume of exports have depleted cotton stocks leading to fears of shortage. Consequently, the gap between domestic and global prices has narrowed to even one or two cents an lb, and in some cases, domestic cotton is 4-5 per cent more expensive than the imported varieties, making imports an attractive option for mills. Home-grown Shanker 6 is hovering around Rs 39,000 a candy (of 356 kg).

Mr Goenka, a Kolkata-based trader, confirms the trend. “Cotton purchase by mills has increased in recent times. International merchants are liquidating their stocks across Punjab, Haryana, Rajasthan, Gujarat and Maharashtra.”

“Monsoon holds the key for everything. We have seen an increase in domestic prices as well as imports. Although it (the imports) is not an alarming situation, if monsoon fails imports may go up,” he cautioned.

India needs 252 lakh bales of cotton for consumption in 2011-12, while its output is pegged at 347 lakh bales, according to CAB’s projection.

“Owing to huge cotton exports so far, buyers fear that there won’t be any stocks available in the domestic market after September. So mills that have not been able to stock up significantly due to a severe liquidity crunch are now on an importing spree,” said Mr Daga.

> gayathri.gururajan@thehindu.co.in

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