After jump in global cotton prices to four-year highs, Indiaâ€™s cotton exports have been gathering pace with traders in the world's top producer of the fiber signing contracts in the last three weeks to ship over one million bales, according to industry officials.
Indian cotton is being offered around 82 to 85 cents per lb on a cost and freight basis (C&F) to buyers in Bangladesh and Vietnam, compared to over 90 cents from the United States and Brazil.
Chirag Patel, chief executive at India's Jaydeep Cotton Fibers Pvt Ltd., said that Bangladesh, Vietnam, and Pakistan are aggressively buying from India due to lower prices. India also have freight advantage over others.
Increased supply from India could drag on the rally in international prices and would likely compete with shipments to Asia from exporters such as Australia, Brazil, and the United States.
Atul Ganatra, president of the Cotton Association of India (CAI) said that there is continuous export demand at the current price level. India could export more than 6 million bales in the current season ending on Sept. 30, up a fifth from previous estimates.
India is likely to produce 36.2 million cotton bales in 2017/18, down 1.4 percent from an earlier estimate as the pink bollworm pest has hit some crops in key growing regions such as the western state of Maharashtra, said CAI's Ganatra.
CAI estimates, the nation's cotton stocks could fall to their lowest in 14 years at 2.2 million tonnes at the end of the 2017/18 season, sapped by higher exports and improvement in domestic consumption.
In January, they were expecting India could end the season with exports of 5 million bales. Now even 6.5 million bales seem quite possible, as per a Mumbai-based dealer with a global trading firm. He declined to be identified as he was not authorized to speak with media.
Industry officials and dealers said that Indian merchants have contracted to export 4.7 million bales so far this marketing year, of which nearly 3.5 million have already been shipped.
According to data compiled by the state-run textile commissioner's office, the country exported 5.82 million bales of cotton last marketing year.
A depreciation in the Indian rupee has also boosted exporter profits, stoking the appeal of sending cargoes abroad, dealers said.
The upturn in exports marks a change from just a couple of months ago, when lower global cotton prices meant there was little incentive to ship overseas.
Patel at Jaydeep Cotton said that the demand from Pakistan, which resumed imports from India in January after making no purchases in the previous quarter, has been strong and the country could take as much as 800,000 bales this year.
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