It is expected the arrival of the new cotton crop in the markets next month would lead to a decline in prices.
According to data from the Directorate General of Foreign Trade, registration of cotton yarn exports declined to 104.91 million kg in August, compared with 139.74 million kg in July.
For the benchmark 30's combed variety of cotton yarn, export prices rose to as high as $3.85 a kg. However, due to weak demand from China and the fact that cotton prices have moderated in the domestic market, yarn exporters cut the export price to $3.64 a kg. Some yarn manufacturers have cut prices further, as the market is extremely competitive.
"Currently, domestic demand for cotton yarn is weak and Chinese buyers are aware of it. Therefore, they are taking advantage of the situation and pushing exporters to bring down prices," said S P Oswal, chairman and managing director of Vardhman Group, an integrated textile company.
In the past year, China has reduced its cotton imports from India. However, it has increased cotton yarn imports, as cotton yarn production is India is cheaper and production of yarn in China has fallen due to the rising wages in that country.
"Due to the high prices, many domestic buyers have put their cotton yarn buying on hold, waiting for prices to fall further. Even domestic players find the current price of cotton yarn high," said Bharat Malkan, a Mumbai-based cotton yarn trader.
The industry, however, says the lull on the export front is temporary.