Cotton exports could drop due to higher prices

While Indian cotton prices remain high, trade fears a drop in exports for the current season through September 2022. Cotton exports started on a slow note and shipments from October to November, the first two. months of the season, are down 42 percent from the same a year ago.

According to Cotton Association of India (CAI) estimates, exports were seven lakh bales (170 kg each) in the first two months of the season, compared to 12 lakh bales in the same period a year ago. .

“At these high rates, we won’t be able to meet our export target of 48 lakh bales. We can barely touch 35-40 lakh bales in exports, which will be 50% less compared to exports of 78 lakh bales last year, ”said Atul S Ganatra, President of CAI.

Higher prices

Cotton prices are high across the country and producers are seen withholding their produce, anticipating better prices. This is reflected in market arrivals, which were down 15 percent until the end of November.

On the benchmark Intercontinental Exchange or ICE, the March futures contract is trading around 106 cents a pound. At current price levels, Indian cotton prices are equivalent to around 120 cents per pound on the ICE, making it expensive for overseas buyers.

Trade sources said there is not much buying interest in exports at the moment, in a market with higher prices, even during this peak season. Sources said prices are only higher due to insecurity of low arrivals and harvest expectations. The non-seasonal rains from October to November impacted the harvest, causing quality problems.

“Exporters are buying at a very slow pace,” said Ramanuj Das Boob, a sourcing agent for national factories and multinationals in Raichur, Karnataka. At going prices, exports will certainly be lower in the coming year, he said.

Preserve the products

Ganatra said although arrivals improve in December, farmers are not selling the premium cotton and are holding back. Farmers market the cotton harvested in the third and fourth harvests, while they keep the first and second harvests at home, expecting higher prices.

Ganatra estimates that farmers across the country hold around 150 lakh bales of premium cotton. The first and second picking of the cotton is considered to be of the best quality. “It’s coming to market very slowly,” he said.

According to recent estimates for the 2021-22 season, CAI set the crop size at 360.13 lakh bales, more than the 353 lakh bales from the previous year. The trade body expects domestic demand to remain stable at last year’s levels of 335 lakh bales.

“Although it is unlikely that there will be a major change in the size of the crop, the marketing season may extend until August-September, as farmers can continue to retain their produce,” said Ganatra.

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