 "A farmer harvests cotton in his field at Rangpurda village in Gujarat")
While Pakistan recently lifted ban on cotton imports from India, the Indian exporters are unable to capitalise on the move. Last year, of the initial three million bales (a bale of 170 kg) of export orders during October to December, 1.5 million bales were exported to Pakistan. However, right now with daily arrivals still under pressure, exporters are unable to take orders.
Pakistan had banned import from India in fourth week of November on quality issue but after industry urged the government, Pakistan has lifted ban a few days ago.
According to Indian cotton industry, Pakistan may import about 700,000-800,000 bales of cotton in 2016-17. Last year, India exported 2.5 million bales of cotton to Pakistan which was facing crop failure then.
Post demonetisation, till date, several mandis are not fully operational with arrivals dwindling due to cash crunch among farmers. Cotton arrivals are down by 25-30% as compared to last year, despite a slight improvement in early December.
Last year, December cotton arrivals stood at 200,000 bales, against 140,000-150,000 bales a day this year. In December, arrivals increased by about 30,000 bales after farmers began accepting payments made through cheque.
"While India is the best choice for Pakistan for cotton imports, Indian cotton exporters are unable to profit from it. Demand is there from Pakistan and other countries but Indian exporters are not in a position to fulfil the demand. Moreover, as supply is tight, exporters are not in a condition to fulfil their commitments that they made for November and December. Due to this, exporters are not booking new contracts as they are not sure about supply," said Shirish Shah of Bhaidas Karsandas Company from Mumbai.
After note ban, cotton prices had gone up to Rs 40,000 per candy of 355 kg which is now ruling at Rs 38,800-39,200 per candy.
This year, India had booked cotton export contracts of about 2.2 million bales for October, November and December delivery but so far the country has exported about 500,000 bales only by end of November.
According to the exporters, in this scenario, India's total cotton exports may decline by 20-25% at the end of the year.
Chirag Pan, CEO of Jaydeep Cotton Fibres said, "India exports 70% of cotton during October and March every year. The industry expects six million bales of cotton exports in the current cotton year (October-September), but in this scenario, exports might not be over 4.5 million bales."
Moreover, despite some amount of export demand, cotton ginners are unable to process much as they are not getting raw cotton or kapas from farmers.
Subodh Goenka of J S Cotton Industry from Akola, Maharashtra said, "Generally at this time ginning activity should be in full swing but due to supply shortage and higher prices ginning activity has been quite low."
Kapas or raw cotton has been trading at Rs 990-1,060 per 20 kg in Gujarat, with prices going up by Rs 20 per 20 kg during December so far.
