CAI president Atul Ganatra said around 8 lakh bales of cotton were contracted for export, of which 6 lakh have already been shipped.
Contrasting stories are emerging from the market about cotton exports to China in the wake of the coronavirus scare. While the Cotton Association of India (CAI) claims business is now limping back to normalcy, other trade bodies say there is still panic since the payment cycle has been affected.
CAI president Atul Ganatra said around 8 lakh bales of cotton were contracted for export, of which 6 lakh have already been shipped. The position is improving in the international market and prices have also firmed up by Rs 500 per candy, he added.
“A fortnight ago, there was panic among traders. But the sentiment has been improving over the last couple of days. There are reports of a vaccine being approved by the Chinese government and this news could further improve the sentiment,” he said.
Ganatra added that some inquiries have been made for export deals from China for April.
Though senior officials of the Khandesh Gin/Press Owners and Traders Development Association confirmed the export contract deals at 8 lakh bales with China, they pointed out that of the 4-5 lakh bales shipped from the country, some were either in the middle of the sea or lying at ports in China as there were no officials to unload the consignments. “As a result, the payment cycle is stuck since no banks are open to clearing the letters of credit,” Ginners Association vice-president Arvind Jain said.
Cotton prices are said to have gone down by 5-6% owing to the weak market sentiment. Association president Pradeep Jain said the shipments have been delayed and trade is in a quandary. Private traders buying cotton from farmers at Rs 5,200 per quintal are now offering Rs 5,000 per quintal, he said, adding that the cotton yarn business has been hit more than cotton trade.
However, Manish Daga, who runs CottonGuru, a cotton advisory for farmers, said the situation is not as bad as it was being portrayed. “It is not like all the cotton consignments are stuck at ports and the sentiment should improve soon,” he added.
According to Ganatra, the association has pegged the total exports from India at 42-45 lakh bales. So far, 28 lakh bales have been exported. Bangladesh, Vietnam and Indonesia are other export destinations, with Bangladesh accounting for 20-22 lakh bales and 7-8 lakh bales go to Vietnam.
Cotton Corporation of India is estimated to have purchased some 68 lakh bales from farmers under MSP operations. While wholesale prices are hovering near the government-declared MSP of Rs 5,550 per quintal, traders are cautious of them falling once the quality of cotton arriving in the markets deteriorates.
Indian candy, which contains 356 kg of pressed cotton, is at present trading at Rs 39,000-39,500 against Rs 40,000-41,000 per candy.
CAI, in its January estimate for the season 2019-20 beginning October 1, 2019, has retained its cotton crop estimate at 354.50 lakh bales of 170 kg each. There is no change in the projection of export — retained at 42 lakh bales as estimated by the CAI, Ganatra said. The projection of import is 25 lakh bales. The import figure is lower by 7 lakh bales against that estimated for last year.
Cotton export shipments already shipped from October 1, 2019, to January 31 this year, are estimated at 20 lakh bales, while the balance 22 lakh bales are expected to be shipped during February 1 to September 30 this year.
Shipment of imports from October 1, 2019, to January 31 this year, which have reached Indian ports are estimated at 10 lakh bales, while the balance 15 lakh bales are estimated to arrive at Indian ports during February 1 to September 20 this year.