India’s cotton exports may increase by about 30 per cent for the current crop year (October 2020-September 2021) as rising global prices have made the fibre competitive.
According to trade experts, including Cotton Corporation of India (CCI) Chairman and Managing Director (CMD) PK Agarwal, exports could be between 65 and 70 lakh bales (of 170 kg each) compared with 50 lakh bales the previous year.
Agarwal sounded bullish on export prospects with CCI holding huge stocks of the fibre. “Export demand is good and overall Indian exports could be around 65-70 lakh bales this (crop) year,” said the CCI CMD.
“We will easily export over 65 lakh bales in the current global market scenario,” said Rajkot-based raw cotton, spinning waste and yarn trader Anand Poppat.
The bullishness on cotton exports, after traders pruned their projections to 54 lakh bales last month, follows cotton prices in New York topping 89 cents per pound (₹45,924 a candy of 356 kg).
In contrast, Shankar-6, India’s benchmark cotton for export market, is quoted at ₹44,600-45,100 a candy. Cotton futures for delivery in April were quoted at ₹22,200 a bale (₹46,489 a candy) on MCX.
“Indian cotton is still the cheapest in the world,” Agarwal said adding that there was good demand from countries such as Pakistan, Bangladesh, Vietnam and China among others. “Bangladesh is the biggest buyer of Indian cotton. Turkey and Indonesia are other buyers. Pakistan also needs cotton as its crop is lower this year,” Poppat said.
However, trade between Pakistan and India came to a halt after the Pulawama blast in February 2019. But Islamabad can still get the commodity from Dubai or other Gulf destinations, indirectly.
Indian shippers are offering cotton at least 10 per cent lower than the prices quoted on New York Mercantile Exchange.
Lower US crop
Brownfieldagnews website quoted a US national cotton council official as saying that cotton prices are projected to rule strong this year on demand recovery. Global economy is recovering at a faster pace and mills are buying more cotton.
Agarwal said a lower US crop is also seen as a positive for the Indian exporters.
Though the USDA has maintained its crop production prospects in the US, traders expect a cut next month, thus buoying the price.
Poppat said at least 30 lakh bales have been exported by January-end and another 2-3 lakh bales could have been exported so far this month.
On its part, CCI expects to ship a good amount of cotton this year through open market and global tenders.
“We expect our share in India’s total exports could be around 10 lakh bales this year,” Agarwal said.
CCI, under the Centre’s procurement scheme at minimum support prices (MSP), has purchased 91.8 lakh bales accounting for nearly 25 per cent of the projected crop this year.
The Committee on Cotton Production and Consumption (CCPC) has estimated this year’s production at 371 lakh bales compared with 365 lakh bales last year. The Cotton Association of India (CAI), a body of traders, has retained its production estimate at 360 lakh bales. India holds an advantage with high carryover stocks of over 110 lakh bales from last year. CCPC has projected the carryover stocks from last season at 125 lakh bales, while CAI has pegged it at 113.50 lakh bales
Agarwal said that CCI has sold 20 lakh bales so far and the corporation currently has 70 lakh bales stocks with 63 lakh bales from the current season.
The CCI CMD said the public procurement will be coming to an end as the arrivals have tapered off and the market prices are ruling at ₹6,000-6,200 per quintal, above the MSP of ₹5,515.
According to traders, farmers have begun to hold back their produce expecting further rise in prices.
In Gujarat’s Rajkot district, one of the primary growing regions, raw cotton or kapas was quoted at ₹5,850 a quintal on Thursday, while prices in Punjab markets ranged between ₹5,700 and ₹6,000.
According to the Ministry of Agriculture and Farmers Welfare, kapas arrivals across the country were 2.84 lakh bales during February 15-18, lower than 3.91 lakh bales during February 8-11.
Rajkot trader Poppat said one hurdle in cotton exports could be the persisting container problem. “It continues to affect shipments,” he said. However, traders and exporters expect the situation to improve from April onwards.