Why cotton imports and exports may decline

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Published: July 16, 2019 12:29:20 AM

India usually exports around 60-70 lakh bales annually. Although cotton imports are currently taking place, the pace is slow and imports are likely to be down as well, experts said.

India, cotton, cotton export, kharif crop, industry, Khandesh Cotton Gin, Press Owners Association presidentThe Association has estimated that actual imports can be between 28 lakh bales and 30 lakh bales when the season ends. The Cotton Advisory Board (CAB) has estimated it to be 22 lakh bales.

With international prices currently ruling lower than the domestic ones, the country’s exports are likely to drop till the end of cotton season up to September 30, 2019, to 40-50 lakh bales, according to industry experts. Imports were likely to be on the lower side as well, trade bodies said.

India usually exports around 60-70 lakh bales annually. Although cotton imports are currently taking place, the pace is slow and imports are likely to be down as well, experts said. India has signed import deals for around 25 lakh bales of which nearly 20 lakh bales have arrived and the rest is expected to be shipped till September 2019, traders say.

Domestic cotton prices have been ruling firm on speculation of a shortfall in production for the 2018-19 (October-September) marketing year. However, steadily falling global prices along with weak demand for cotton yarn are likely to drag domestic prices lower in the months ahead.

Cotton prices were quoted at Rs 44,000 per candy, which were around Rs 47,000 per candy till 10 days ago. International prices are currently ruling at Rs 42,000 per candy, Khandesh Cotton Gin/Press Owners Association president Pradeep Jain said.

Shipments of nearly 22 lakh bales had arrived and another 10 lakh bales were expected till the end of the season, he said. The Southern India Mills’ Association (Sima ) has earlier estimated cotton imports at 22 lakh bales. The Association has estimated that actual imports can be between 28 lakh bales and 30 lakh bales when the season ends. The Cotton Advisory Board (CAB) has estimated it to be 22 lakh bales.

According to the data released by Cotton Association of India (CAI), the total cotton supply till end of the cotton season up to September 30, 2019, is estimated at 376 lakh bales of 170 kg each consisting of the opening stock of 33 lakh bales at the beginning of the season. CAI estimated imports at 31 lakh bales, which are higher by 16 lakh bales against the previous year’s import estimated at 15 lakh bales. Domestic consumption estimated by CAI for the entire crop year September 30, 2019, is 315 lakh bales while the CAI has estimated exports for the season at 46 lakh bales, which are lower by 23 lakh bales compared to the previous year’s cotton exports estimate of 69 lakh bales.

The carryover stock estimated at the end of the season is estimated at 15 lakh bales. In global terms, Indian-origin cotton is being offered at 83-85 cents a pound, compared with 88 cents per pound in April-May, even as rates for the US and West African varieties, preferred by Indian traders, continue to hover at 80-82 cents.

According to traders, imports may gain pace again only if monsoon progress in India remains significantly weak in July as well, as it could threaten the domestic kharif crop, which largely depends on rains. Jain said there had been no rainfall in the last couple of weeks and a clearer picture should emerge after a fortnight.

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