Demand from China may not see a rebound as normally it buys more than 50 per cent of India’s shipments. But Pakistan has, so far, contracted to import one million bales (170 kg each) of cotton from India after the crops there were affected by floods, according to Dhiren N Sheth, president of the cotton association of India (CAI).
Pakistan is buying more cotton from India as both the quality and quantity of the crop has come down. Pakistan’s cotton production is expected to drop 25 per cent to 11.4 million bales this year, the lowest since 2003.
As Pakistani garments manufacturers see Indian market as a big opportunity, the western neighbour has also opened its door to India to sell cotton, potentially moving local prices even as harvesting continues. Bangladesh and Indonesia will be the other two major buyers of Indian cotton.
Farmers in India last year suffered after China, the world’s top cotton consumer, cut import quotas to balance its own stockpiles accumulated over two years.
The wholesale prices of cotton were quoted above Rs 4,100 a quintal as of December 4 in most of the places in Gujarat and Telengana, compared with about Rs 3,200 a quintal in October 2014, according to the agriculture ministry data. The government had asked the cotton corporation of India (CCI) to buy the fibre at a minimum support price of Rs 4,000 a quintal. The MSP has not been increased this year.
With the increase in cotton prices, the government may not have to roll out subsidies. It released Rs 16,000 crore to buy 8 million bales from farmers in the 2014-15 season.
This year’s procurement will be less and may be about 3 million bales, according to B K Mishra, chairman and managing director of CCI.
According to the association’s data, India’s cotton output is set to fall to 37.05 million bales in 2015-16 from 38.27 million bales last year. . Domestic consumption is estimated at 32.5 million bales, while imports would be 1.4 million bales this year. The opening stock was 7.86 million bales.
Due to lower freight, India is the first choice for buyers in Pakistan, according to a Reuters’ report that quoted Shahzad Ali Khan, chairman of Pakistan cotton ginner’s association. Indian traders have contracted to sell at 63-66 US cents per pound, mainly via the Wagah border. Pakistan’s overall cotton imports are seen climbing to 4 million bales in the year that started on August 1, from 1.2 million bales a year ago.
Buoyed by the positive news from across the border, textile minister Santosh Gangwar last week said that the country’s cotton shipments were expected to rise by about 18 percent in 2015-16 compared with the previous year, citing estimates of the cotton advisory board (CAB) under the textile ministry.
During the cotton year of 2014-15 (from October 1, 2014 to September 30, 2015), 5.77 million bales of raw cotton were exported as against 11.69 million bales during the cotton year of 2013-14, the minister said. He attributed the decline to a substantial reduction in import by China.
This year, two-third of India’s cotton crop in Punjab got damaged due to whitefly attack, mainly in the Malwa region. The state grew cotton in about 450,000 hectares and it produced 1.4 million bales in 2014-15 (crop year). This year’s cotton acreage was less than 500,000 hectares.
Punjab, which grows Bt cotton like any other state, had not seen pest attack on such a scale in the past. Whitefly is to be controlled through sprays of pesticides as Bt cotton provides resistance against four other insects, including Bollgard.
Meanwhile, the Maharashtra state co-operative cotton growers marketing federation is ready to procure up to 10 million quintals of cotton against the 2.7 million quintals purchased last season. The federation has opened 96 procurement centres in three phases.