Cotton buyers from across the globe are rushing to India to get a better bargain as prices here are 5 per cent lower than other countries, says a report.
"Indian cotton is currently very competitive in the international market, about 5 per cent cheaper vis-a-vis comparable cotton from other origins," the US Department of Agriculture (USDA) said quoting industry sources in the report.
So far, a significant portion of the arrivals have been picked up by exporters, it said, adding that going forward prices are likely to gain further on strong export demand.
According to trade data, Indian cotton is quoting at 71.5 cents per pound (including logistic cost) now against international Cotlook rates of 75.10 cents pound.
"India has become an attractive destination for buyers from Indonesia, Bangladesh and China mainly due to limited cotton supply in the global market and comparatively strong international prices," an official with the Confederation of Indian Textile Industry said.
USDA said: There has been a big spurt in export registrations for the new crop since October as India shipped 19.2 lakh bales of cotton between August and mid-November, compared with 3.25 lakh bales in the year-ago period.
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It further said, "Strong international cotton prices have improved the export prospects for Indian cotton. In the 2009-10 season (October-September), exports are likely to touch 67 lakh bales assuming no government interventions on the current export policy for cotton."
Last year, the shipments were only 23.6 lakh bales. One bale contains 170 kg of cotton.
But on the flip side, improving cotton exports has put pressure on domestic rates, which have shot up by 20 per cent in the last three months, a trader said.
"International cotton prices will largely guide the domestic price movement during most of the current season," the report said.
At present, the harvest is progressing well under ideal weather conditions and there is no major damage due to the late season rains in most states, it said.
Current daily arrivals are estimated at 1.15 lakh bales per day, and are expected to peak in the next two to three weeks, it added.
Pointing out about possible export curbs on cotton, USDA said, "The government will closely monitor the cotton price and supply situation, and may take export control measures in the later part of the season, if deemed necessary."
The government may not impose export controls immediately as export curbs will adversely impact the seed cotton prices during the peak arrival season (December-February), it said, quoting industry sources.
As per USDA estimates cotton output in India will reach 238 lakh bales in 2009-10 season from an estimated area of 102 lakh hectares.