The Cotton Corporation of India (CCI) has finally decided to come out with global tender for export of cotton to Bangladesh. CCI chose Bangladesh as the logistics are better and easier to manage either by the sea or roadways. China, the worldâ€™s biggest buyer, is importing less of the fibre from this year which has affected Indian export.
China has been the largest importer of Indian cotton over the last three years. According to CCI CMD BK Mishra, the response from Bangladesh has been good and should this sale be successful, CCI has plans to tap Vietnam as well.
The CCI is now reworking its pricing strategy for international buyers and may soon bring it down to 70 cents. B K Mishra expects a good response to the tender that has been floated by the corporation on its website amid concerns among the industry that not enough cotton has been exported,
According to Mishra, the earlier advertisement by CCI inviting buyers to register themselves for export to Bangaldesh had got a good response and 8-10 exporters had registered themselves with CCI in addition to some of the domestic buyers who export as well. Bangladesh usually purchases around 55-60 lakh bales of cotton from India.
Due to the price of 76-77 cents quoted by CCI, the tender initially did not garner much response. The working price for exporters is 68-70 cents since the rupee value has increased to 62.15 from 62.70 against the dollar.
The Cotton Advisory Board (CAB), a body comprising growers, traders, exporters and the textile industry, has projected exports at 90 lakh bales this season against 117.92 lakh bales last season.
The International Cotton Advisory Committee( ICAC) has also forecast lower exports, though it sees domestic demand growing 4% year-on-year. CAB predicts domestic demand rising to 311 lakh bales against 298.88 lakh bales.
The Southern India Mills Association (SIMA) recently appealed to the Central government to consider industryâ€™s long-pending demand of restructuring the CAB by inducting major stakeholders of cotton so that better strategy and policy could be adopted by the CCI, said T Rajkumar, chairman, SIMA in a release here.
He further said that the CAB estimates 70 lakh bales will be exported during the current season. So far only around 45 lakh bales have been exported. The volume may not exceed 55 lakh bales as China has stopped its imports.
According to Cotton Association of India (CAI), CCI should be liquidating their stock faster than the current pace. If the CCI continue liquidating their stock at the current pace, they would be stuck with a stock of about 30 lakh bales at the end of the season. This augurs very badly for the new season as it will trigger off a massive support price operation in the new season also. This will result in a big hit to the cotton farmer. Until now, CCI has not sold a single bale in the international market.
CCI has been placing 50,000 bales on a daily basis on the board for e-auction and around 80-90% of this has been picked up by mills.
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