Higher domestic prices affects cotton exports from India

In the current cotton year which runs from October of one year to September of the next, about 37 percent of exports have been to Pakistan. But with the domestic cotton prices on the upside since April, moving up to Rs 50,000 a candy (356 kg), due to expectation of weak production this has affected exports, mainly to Pakistan, says the trade.

J Thulasidharan, president of the Indian Cotton Federation said that China is the major buyer for Indian cotton but this year’s demand was not so good. Against it, due to crop failure, Pakistan became a major importer. However, if our prices were lower, the overall export might be higher than it has.

Thulasidharan further said that higher domestic price also increased the cotton import this year as stock size in India is less. This has forced the domestic mills to import cotton. So far India has imported about two million bales and it may increase further.

As per reports, Pakistan is looking at other options such as the US to import cotton. Even Indian experts believe that so far, India has exported about 2.5 million bales to Pakistan only out of the total exports of 6.8 million bales.

During June and July this year, Indian cotton prices were higher than international prices. While buyers are getting cheaper cotton from others why one should buy at the higher rates. However, all depends on demand. There was a good demand from Pakistan this year but after prices gone up, this has affected the export from India, said Naveen Mathur, associate director of commodities and currencies business at Angel Broking.

Many mills from South India because of high cotton prices in domestic markets are importing from West Africa. According to industry sources, India has imported about two million bales of cotton during this year so far.