Demand from Bangladesh and other southeast Asian countries would boost the cotto...
Dated- 09 May , 2012 - India
India could ship up to 2 million additional bales of cotton in the current crop year, reaching a record 13.5 million bales after the government allowed export sales to resume, a trade association said on Wednesday.
Last month, India reversed a ban on cotton exports imposed in March as concerned eased that supplies would fall short for the textile industry, the country’s second largest employer, allowing firms in the world’s second-biggest producer and exporter to resume shipments abroad.
“We can export 1.5-2 million bales more as demand from neighbouring Bangladesh and other southeast Asian countries is very good,” Dhiren N. Sheth, president of the Cotton Association of India, told Reuters in a telephone interview.
India has already shipped 11.5 million bales of 170 kg each in the current crop year ending in September, according to data from the Cotton Advisory Board (CAB).
The March ban came as exports raced ahead of initial government estimates of 8.4 million bales as China, the main importer of the fibre, filled state reserves.
The estimate by Sheth would bring shipments abroad to a record 13.5 million bales, nearly 54% higher than the previous record 8.8 million bales in 2007-08, putting pressure on depressed global cotton prices, traders said.
The farm ministry has estimated 2011-12 cotton output will touch a record 35.2 million bales, higher than the CAB’s estimate of 34.7 million bales.
With a carry-forward stock of around 4 million bales, the total availability in the current year stands at 39.2 million bales, while domestic cotton consumption is estimated to fall to 25.2 million bales from 26.7 million bales in the previous year, according to CAB data.
Bangladesh Market Attractive
Demand from major textile manufacturer and exporter Bangladesh is good, and with the Indian rupee down nearly 5% in the previous six weeks to above 53 to the dollar, Indian exporters are eager to sell to firms there that would pay in the US currency, Sheth said.
“We prefer Indian cotton due to its proximity to Bangladesh that cuts costs and time,” said Jahangir Alamin, president of a mill industry group in Bangladesh, which gets about 30 to 40% of its annual cotton imports of around 4 million bales from India.
Indian cotton gets a premium in Bangladesh and Southeast Asian countries over supplies from the United States, the world’s top exporter, due to lower freight costs, traders said.
On Tuesday, the benchmark July contract on the ICE extended losses to close down 0.57% at 86.18 cents per lb, the lowest for the second-position cotton contract since late December 2011, according to Thomson Reuters data.
“Most of the Indian traders are signing contracts at around 92 cents per lb (CIF), a premium of around 6 cents above New York futures,” said Arun Bhai Dalal, a trader based in Gujarat.
Private mills in China are still buying cotton, raising some hope for higher prices, along with the prospect of Beijing allowing more imports in May on low prices, Dalal said.
China was scheduled to issue a new batch of import quotas for as much as 1.5 million tonnes (8.8 million bales) in May, but hasn’t made an announcement yet.