India’s cotton imports likely to rise by more than 25 percent above the official forecast

India’s cotton import witnesses rise in recent week as cotton sowing has been delayed this year due to weak monsoon raising concern about production followed by sharp decline in cotton prices overseas.

Mills in the coastal textile hubs of southern India have started bringing in shiploads of cotton from Africa due to lower freight costs and as benchmark prices fell to a five-year low on Aug. 1 because of the prospect of ample global supply.

Worldwide inventories could swell to a record of nearly 106 million 480-lb bales by the end of the U.S. crop year ending July 2015, helped by a surge in output in the United States, according to the U.S. Department of Agriculture.

This is also depressing spot prices in some countries, with rates in Tanzania as much as 10 percent lower than the 86 cent per pound quoted in India.

According to M.B. Lal, managing director of Shail Exports and former chairman of the Cotton Corp of India, imports of cotton mainly from West Africa have increased because their prices are much cheaper than India’s and the quality is also good.

The pick-up in shipments could take India’s total imports by more than 25 percent (more than 1 million bales) above the official forecast of 800,000 bales for the season ending September and help support cotton futures.

West Africa and Tanzania are the most preferred destinations because availability is sufficient and quality is good, said S. Dinakaran, joint managing director at Sambandam Spinning Mills in the southern state of Tamil Nadu.

A delay in the arrival of the new crop next season due to delayed sowing could also force Indian buyers to sign extended import contracts.
Imports may rise further if new season supplies get delayed or prices increase in the absence of supply, according to a trader in the main cotton growing state of Gujarat.

However, imports will still be below last season’s 1.4 million as China is buying less yarn that uses cotton. India’s cotton production in 2013/14 is estimated to be 39 million bales.