Cotton exports from India have come to a halt, as prices in the global markets are lower than in India. Earlier, the textile commissioner had said this year, cotton exports would stand at seven million bales, compared with 12 million bales last year, as China, which accounts for about 65 per cent of India's cotton exports, was cutting its imports by half. However, considering the current trends in India and global markets, exporting even seven million bales would be difficult.
Though some traders who had received orders earlier have exported the commodity, no new orders are being recorded. Prices of Indian cotton are higher than those of international cotton by Rs 2,000-3,000 a candy, and this has led to the commodity being imported in the past few months. Cotton prices in the Gujarat market currently stand at about Rs 32,500 a candy for the Shankar 6 variety, the benchmark quality.
Cotton exports haven't been affected in India alone. According to Rabo Bank's agri-commodity report for November, “US export commitments for the 2012-13 cotton year are trailing the five-year average.: The International Cotton Advisory Committee has said global cotton trade is expected to shrink significantly this year. “After an unexpected jump in 2011-12, global cotton trade is expected to fall 21 per cent to 7.7 million tonnes this season due to lower demand from China, “ it said.
| RIDING A HIGH | |
| Cotton exports | (In million bales) |
| 2006- 07 | 5.80 |
| 2007-08 | 8.85 |
| 2008-09 | 3.50 |
| 2009-10 | 8.30 |
| 2010-11 | 7.65 |
| 2011-12 | 12.88 |
| Source: Bloomberg Compiled by: BS Research Bureau | |
However, imports by the rest of the world could rebound 18 per cent. Exports from most large exporting countries would decline, particularly those from in India, owing to increased domestic consumption….Global cotton production and mill use are estimated at 25.9 million tonnes and 23.4 million tonnes, respectively, resulting in an oversupply of 2.4 million tonnes," it said.
Rabo Bank expects China's stock-to-use ratio for 2012-13 at 103, the highest since 1998-99, and this would curtail demand for cotton.
"There is no export demand from major markets, and this may continue for a while," said Shirish Bhai Shah, a Mumbai-based cotton trader.
So far, cotton arrivals across the country stand at 1-1.2 million bales, compared with 1.6 million bales last year. The average arrivals of cotton in this period are 2-2.5 million bales.