Cotton exports are expected to increase around 30 per cent in 2017-18 from its last year’s level and may reach a four-year high of 7.5 million bales. The rise in shipment can be attributed to a soaring global prices and a weaker rupee (the rupee has fallen more than 6 per cent in 2018, making Indian cotton cheaper for overseas buyers).
Union textile minister Smriti Irani is even more bullish and thinks exports market (at least going by the potentials) can be even larger. Speaking at an event in Kolkata recently, she said if the domestic cotton industry can create a brand for India’s cotton and a niche for itself, the export market would be much bigger. She also urged the domestic cotton industry to come up with a proposal regarding branding of the country’s cotton, primarily aimed at the export market.
Interestingly, unlike the US, China or Egypt, Indian cotton has no brand of its own and hence is unable to carve a niche and earn a premium.
In the current marketing year that started on October 1 India, so far, has exported 6.3 million bales, each bale containing 170 kg of cotton. India had shipped 5.82 million bales of cotton overseas in the last marketing year. The Cotton Association of India (CAI) is of the view that increased supply from India could be a drag on a rally in global prices and would likely compete with shipments to Asia from exporters like the US, Brazil and Australia.
India is the second largest producer of cotton in the world after China. And among the Indian states, Gujarat is the largest producer of cotton, followed by Maharashtra. Other cotton producing states are Punjab, Karnataka, Haryana, Tamil Nadu, Rajasthan, Andhra Pradesh and Madhya Pradesh.
Pakistan, Bangladesh, China and Vietnam are the main buyers of Indian fibre. This season, Bangladesh has emerged as the biggest buyer of Indian cotton, importing nearly 2.1 million bales, overtaking China. China had remained the largest importer of Indian cotton until now.
Meanwhile, cotton prices have firmed up in the domestic market by Rs 350-400 per quintal. Industry experts feel that prices will remain on the higher side with international rates also on the rise. According to Cotton Corporation of India, prices usually go up at this point in the season because of the slowdown in arrivals.
Prices are around Rs 44,000 per candy and have been going up in the past 10 days. With more demand coming from spinning mills as well as ginners, prices are likely to remain firm. With nearly 30 more days remaining in the current season, arrivals are learnt to have slackened a bit to 0.5 lakh bales a day. But 32 million bales have arrived in the market, so far, which has pushed prices up.
The market pundits are also expecting a further surge in demand from China as the Communist Party-ruled country has witnessed sharp depletion in buffer stock. Earlier, China maintained a buffer stock for one-and-a-half years, which has come down to a year’s stock.
ritwikmukherjee@mydigitalfc.com
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