Cotton import is likely to double at 1.5 million bales (a bale is 170 kg) in the current cotton year (October 2013-September 2014), as compared to 0.7 million bales the previous year, due to the higher prices in the domestic market than abroad, according to the Confederation of Indian Textile Industry (CITI).
The benchmark Shankar-6 variety is trading at Rs 11,642 a quintal, in comparison with the landed cost in southern ports at Rs 11,000 a quintal.
Indian mills have signed contracts with African suppliers for all types of cotton imports as the sea transport cost from Africa to southern ports is radically lower than surface transport cost from the central and western Indian states. Cotton is selling at four-five percent premiums.
However, in the past week prices in both domestic and international markets declined two to three per cent. The trend is likely to continue, due to lower demand from China as it is a perennial importer from India but it is not buying the quantity of both cotton and yarn as in earlier years. Cotton demand from the domestic market has also fallen in recent months, due to decline in consumption from yarn producers.
Prices are likely to remain subdued. Reflecting the trend, cotton on the InterContinental Exchange is quoted lower for delivery in November and December, compared to near-month contracts.
Texprocil the apex export promotion body, has urged Cotton Corporation of India to buy from the Indian markets when prices are cheaper rather than international market and offload when these breach international prices. This will benefit both farmers and mills.
Texprocil reported yarn exports to touch 293.6 million kg in the first quarter of the current financial year (2014-15), compared to 279.3 million kg in the same period last year despite the recent weeks witnessing slow move in export.
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