Source: Business Standard

With lower exports estimates, India will have surplus cotton leading to steep fall in prices this year

Sharleen D’Souza  &  Dilip Kumar Jha  |  Mumbai 

November 27, 2014 Last Updated at 22:35 IST

Cotton export for the October 2013-- September 2014 period is likely to decline 45 per cent from a year earlier, owing to falling demand from major importers China and Bangladesh. Exports will be 6.5-7 million bales (one bale=170 kg) this year, against 11.8 million bales last year, according to estimates by the Cotton Advisory Board.

Due to the decline, India is likely to be left with surplus cotton, leading to a steep fall in prices. Parth Mehta, joint managing director of Bhadresh Trading Corporation, the country's largest cotton exporter, estimates fibre exports this year at 6.5-7 million tonnes.

Sanjay Mittal, director of Sunny Trexim, a large exporter, said, "Exports may be about seven million bales this year." In recent months, China has reduced import from India. Bangladesh, the second-largest importer, has also cut these. China accounts for about 60 per cent of India's cotton exports. Of Bangladesh's overall imports, 30-40 per cent is from India. This year, it is expected to import only 25 per cent, due to high prices.

 

Cotton balance sheet (million bales)

Particulars

2013-14

2014-15

Opening stock

5.26

5.89

Crop size

40.73

40.55

Imports

1.18

1.3

Total supply

47.16

47.74

Mill consumption

26.67

27

SSI units consumption

2.4

2.6

Non-mill consumption

1

1

Total demand

30.07

30.6

Available surplus

17.09

17.14

Source : Cotton Association of India

 

"Indian cotton prices are higher than international prices. Bangladesh mills will prefer to import from the US and Pakistan, as prices there are lower," said Shafiqul Islam Sarker, director of Bangladesh Textile Mills Association.

This year, Bangladesh's overall  consumption is estimated at 850,000-900,000 tonnes, compared with 800,000 tonnes last year. Sarker added Bangladesh's spinning capacity hadn't increased, due to which cotton consumption, too, would remain stagnant.

D K Nair, secretary-general of the Confederation of Indian Textile Industry, said, "Indian cotton exports will definitely not meet the Cotton Advisory Board's estimate of nine million bales. But it is too early to estimate."

In spot mandis, the benchmark Shankar-6 variety has fallen 17 per cent to Rs 9,336 a quintal from Rs 11,220 a quintal on September 1, following the trend in the international market.

The Cotton Association of India estimates India's output in 2014-15 at 40.55 million bales, against a demand of 30.60 million bales. After factoring in the carryover stock and import, the exportable surplus stands at 17.14 million bales.

Last season, overall output stood at 47.16 million bales, against a demand of 30.07 million bales, with a surplus of 17.09 million bales. (Source: Business Standard)