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India’s cotton exports to get a boost with global cotton consumption seen going up.
In its latest cotton demand and supply estimates for March, the International Cotton Advisory Committee (ICAC) has revised upwards the global consumption projections at 24.5 million tonnes (mt) for 2020-21 against 22.8 mt in the previous year.
“With some signs of recovery, the seven per cent expected growth in mill-use would not be a complete rebound from the losses incurred during the pandemic but would exceed production for the current season,” ICAC stated in its estimates released on Monday.
Export prospects bright
However, the rise in the global consumption will boost prospects for Indian cotton exports. Cotton Association of India (CAI) had projected India’s cotton exports at 54 lakh bales (each of 170 kg) for the season 2020-21 against 50 lakh bales in the previous year. This, according to trade sources, is likely to further go up by the end of the season in September 2021.
A Rajkot-based cotton trader and exporter said informed that at the current higher rates of nearly 89 cents per pound, Indian prices are supportive for exports.
CAI estimates have shown that more than half of the projected exports, 29 lakh bales, have already been shipped in the initial four months of the season till January 31.
Indian exporters can look to capitalise on the uptrend in the international cotton prices towards 90 cents. July ICE Cotton futures quoted at 91.52 cents per pound. In India, cotton futures on BSE quoted at ₹46,950 per candy (each of 356 kg of processed ginned cotton), against last month’s ₹44,275.
Supply, offtake
Atul Ganatra, President, CAI, stated that India’s cotton consumption is still sub-par, hence the outlook provided by the ICAC will not have much bearing on Indian market.
“We are a surplus cotton country. Spinning mills in South India are still not operating at 100% capacity. This means, there is not much room for India’s domestic consumption to go up,” said Ganatra.
Meanwhile, ICAC sees cotton supply to increase in the next season i.e. 2021/22 “as higher prices are correlated to expansion in planted area.”
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