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India’s cotton exports are likely to hit 60 lakh bales (each of 170 kg) for the current season (October2020-September 2021) on cost competitiveness.
Trade body Cotton Association of India (CAI) has noted that so far about 60 per cent or 36 lakh bales has been shipped since the start of the season.
This is primarily due to Indian cotton’s price competitiveness in the international market. Indian cotton quoted at around ₹44,000-45,500 per candy (each of 356 kg of processed cotton) during the past couple of months. At this rate, the Indian exporters could offer a 10-per cent discount to the international prices, which hovered at around 85.60 cents per pound.
Higher crop outlook
However, trade insiders informed that India’s competitive advantage may not be sustained as the international cotton prices are seen falling on higher crop outlook in the next year. The downward pressure on the international prices is also reflected in the far month futures on ICE, which quoted December ICE futures at 74 cents — about 11 cents lower than current prices.
On the other hand, Indian cotton prices have also started upward journey amid increased offtake in the export market. The benchmark Guj (ICS-105 - 29mm variety) has surged by over ₹2,000 a candy from ₹43,200 on January 12.
Last year India’s cotton exports were estimated at 50 lakh bales.
CAI projections
For the cotton crop, CAI has revised its output projections downward to 358.5 lakh bales, lower by about 1.5 lakh bales from previous estimate. Last year, the output was expected at 360 lakh bales.
CAI, in its latest crop outlook for March, stated that India’s cotton imports will be around 12 lakh bales for the year, which is lower by about 2 lakh bales from the earlier estimated about 14 lakh bales for the season. The likely drop is attributed to the recent hike in the import duty on long-staple variety of cotton. Last year, India had imported 15.50 lakh bales of the fibre. As per the CAI data, as on February 28, total 7 lakh bales has already arrived at Indian ports.
Cotton balance sheet
Total cotton availability for the season is estimated at 495.50 lakh bales, which included the opening stock of 125 lakh bales at the beginning of the cotton season on October 1, 2020, and imports of 12 lakh bales, besides the crop size of 358.50 lakh bales, of which 298.89 lakh bales or about 83 per cent crop has already arrived in the markets till February 28, 2021.
The CAI estimates suggested that based on the consumption projections, about 330 lakh bales will be consumed in the domestic market, while 60 lakh bales will be exported leaving behind the carry-over stock at the end of the cotton season 2020-21 on September 30, 2021, at 105.50 lakh bales, which is marginally lower from 107.50 lakh bales in the previous season.
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