Agri Business

‘Pak’s import suspension won’t affect Indian cotton shipments’

Rutam Vora Ahmedabad | Updated on January 15, 2018

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Prices seen dropping on improved supplies after cash availability eases

Pakistan’s ‘undeclared’ suspension of cotton imports from India after tensions across the border, is not likely to affect shipments of the fibre from here.

Indian exporters see cotton shipments in 2016-17 in the range of 5.5-6 million bales (of 170 kg each).

Further, Indian cotton exporters see brighter opportunities in neighbouring China and other promising markets such as Vietnam, Indonesia and Brazil as local cotton prices provide parity with international prices.

Ahmedabad-based cotton expert Arun Dalal maintained that in spite of Pakistan’s suspension, cotton exports would remain in the range of 5.5-6 million bales this year.

“There is good demand from other importing countries such as Vietnam, Indonesia and Brazil, besides China. Therefore, we do not see a significant drop in exports,” added Dalal.

Currently, international prices hover in the range of 73-75 cents per pound, which works out to about ₹38,500 per candy (of 356 kg each). Currently, domestic cotton prices are in the range of ₹38,100-39,100 a candy.

“Our prices are competitive with international cotton prices. Hence, we can expect exports even to China,” said a senior official at an Ahmedabad-based cotton export company.

Further drop expected

“The present cotton prices are almost at par with international prices. There was a short-term spike in prices recently, but that is coming back to normal and we expect a downward trend as supplies increase,” said Arun Sekhsaria of Mumbai-based Brijmohan Seksaria & Co.

Sekhsaria sees no impact on India’s cotton exports after Pakistan’s move. “We do not know of anything official from the Pakistani government banning agri-imports from India. But they are not issuing import permits too, so it is understood what their intention is. We are not going to be affected by this as we are no longer dependent on Pakistan,” he said.

Pakistan, which consumed close to 40 per cent or about 2.7 million bales of India’s total 6.8 million bales of cotton exports last year, was expected to import about 1.5 million bales this year.

India’s cotton crop is estimated to come in at 34.5 million bales — a tad higher than last year’s 33.7 million bales. Considering the higher crop, prices are likely to be range-bound as arrivals hit the markets.

Cotton arrivals had come to a standstill after the note-ban announcement on November 8, thereby affecting overall supplies, which stood at around 3.7-3.8 million bales so far for the season.

“The supplies would have hit 70 lakh bales by now but due to lack of liquidity in the market, arrivals slowed down. However, farmers have started accepting cheques and the liquidity situation has also improved, so we expect prices to go down from here as supplies ease,” said Sekhsaria, who is also the member of the Cotton Association of India.

Echoing similar sentiments, Dalal maintained that prices may come down by up to ₹1,000 per candy from the current levels of around ₹38,000-39,000.

Published on November 29, 2016

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