Indian cotton exports likely to end up between 7 to 7.5 million bales for the current year

YarnsandFibers News Bureau 2014-10-29 16:00:00 – Mumbai

With the new cotton season (Oct-Sept) beginning, cotton exports in the country have started to pick up but it is unlikely to meet the estimates of 9 million bales put forward by the Cotton Advisory Board for the 2014-15 cotton season.

According to Prerana Desai, head of research with Edelweiss Commodities they see exports almost 20% lower than what has been estimated by CAB as China, a big buyer is facing slow down and there local Government is pushing for use of higher local material. However, two third of India's cotton exports still directly destined to China.

CAB under textile commissioner has estimated total export in 2014-15 at 9 million bales which is lower by 23% from previous year's export of 11.7 million bales. Analysts are of the opinion that total exports may even miss the CAB estimates for the current year and may end up between 7 to 7.5 million bales.

After fresh orders started to come in from Southeast Asian markets , exports which were almost at standstill have resumed. Even export parity has improved though exports are yet not viable. Four months ago India's cotton prices were higher by 22 cents per pound since then India has been facing issues in exports. However, the gap has narrowed to 6 cents which means now Indian cotton is costlier by 6 cents compared to international prices.

According to MB Lal, a Mumbai based cotton exporter, demand from China is going to be lower this year, but it not completely stop. But, India will see good demand coming in from countries like Thailand, Bangladesh and Pakistan.

However, at this price exporters are clearing the old stock as current year crop has just started arriving. Most of the new crop is still said to be having higher moisture.

Exports can be higher than 7-7.5 million bales if Indian prices drop further or global prices rebound but all depends on how Chinese economy progresses. If it remains slow, cotton demand will not increase which will keep cotton exports under control.

According to cotton traders, China are still the biggest importer of cotton from India is expected to further cut its cotton imports by another 35 to 40 percent.

This year, India's cotton exports to China will see a further impact and is expected to come down further by another 35 to 40%, said Rahul Kotecha, a Coimbatore based cotton trader .

Vietnam on the other hand has started spinning cotton, and is already present in the garment manufacturing thus causing them to import more cotton from India. Thailand has also started to import cotton from India as they have are entering cotton spinning. However from India's cotton exports point of view, these markets are seen as a stand-in to China as China buys from them.

Bangladesh last year imported 1.4-1.5 million bales of cotton. This year, if cotton prices decline further then demand for cotton is likely to go up from Bangladesh.

Indonesia, Pakistan and Far East countries are also expected to import a lot more from India this year but India's exports is expected to be around 7.5 million bales to 8 million bales.

Last year, in 2013-14, cotton exports increased to 11.7 million bales compared to 10.1 million bales in cotton year 12-13, according to Cotton Advisory Board estimates. Last year, as per CAB estimates, China had imported 6.2 million bales till July.

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