Cotton exports from India came to a halt as cotton prices have turned unviable for exports. Prices in global market are ruling lower than prevailing in India and exports of cotton market globally has also been slowed down in recent past.
Textile commissioner had earlier said that cotton exports this year will be 7 million bales compared to 12 million bales last year as China, which imports around 65% of cotton from India is cutting its imports by half. However, going by the current trend in India and global markets, exports of even 7 million bales will not be easy.
Some traders who received orders earlier have exported, but no new orders are coming in now.
Indian cotton is on the higher side by Rs 2,000-3,000 a candy compared to international cotton which has resulted in imports of cotton since past few months. Cotton on the domestic market of Gujarat is currently at 32,500 a candy for Shankar 6 which is the benchmark quality of cotton.
India is not the only one whose exports have been affected. According to Rabo Bank’s agri-commodity report for November, “US exports commitments for 12/13 cotton year are trailing the five year average.” So, even US’ cotton exports are affected.
In fact according to the International Cotton Advisory Committee (ICAC), global cotton trade is expected to shrink significantly this year. It said, “After an unexpected jump in 2011/12, global cotton trade is expected to fall by 21% to 7.7 million tons this season due to lower Chinese demand. However, imports by the rest of the world could rebound by 18%.Exports from most large exporting countries will decline, in particular in India due to increased domestic consumption. Giving reason, the committee said, “global cotton production and mill use are forecast at 25.9 million tons and 23.4 million tons respectively, resulting in an oversupply of 2.4 million tons.”
Rabo bank expe3ct, China’s stock to use ratio for 12/13 is expected to be highest since 1998/99 at 103 which will curtail their demand for more cotton and hence less exports.
“There is no export demand coming in from major markets and this may continue for a while,” said Shirish Bhai Shah, a Mumbai based cotton trader.
Meanwhile, cotton arrivals all over the country are also lower compared to last year, so far all over India cotton arrivals are between 10to 12 lakh bales, while last year despite it being low it stood at 16 lakh bales. The average daily arrivals of cotton otherwise stands at 20 to 25 lakh bales.