Pakistan and China slow purchases on higher prices
Amid changing market scenario, Bangladesh, Vietnam and Indonesia are emerging prominent markets for Indian cotton. Traditional buyers such as China and Pakistan have cut down on their purchases.
According to the data shared by the Directorate General of Foreign Trade (DGFT), in 2017-18, India exported 3.92 lakh tonnes (lt) of cotton (with length of 28.5 mm and above but not exceeding 34.5 mm) worth $715 million to Bangladesh, up 12 per cent from 3.50 lt worth $600 million in 2016-17.
Exports to China, however, fell by 55 per cent between 2016-17 and 2017-18 from 1.54 lt to 69,219 tonnes.
Exports to Pakistan remained almost flat at 1.46 lt in 2016-17 and 1.47 lakh tonnes in 2017-18.
“Bangladesh is now the biggest buyer for India. More than 25 lakh bales (of 170 kg each) have been bought by them till now. According to trade estimates, about 65 lakh bales have been shipped so far this year. But the current rates are not favourable for more exports,” said Shirish Shah of Bhaidas Karsandas & Company in Mumbai.
However, higher prices are hurting exports. “For most of the time last year, Pakistan had banned imports from India. When India wanted to export, we couldn’t but when Pakistan wanted the fibre, they allowed it around March-April.
But cotton exports are again being banned by Pakistan,” said Arun Sekhsaria, a Mumbai-based trader.
The current rate of ₹48,300-49,000 per candy (of 356 kg) seems to be high for the trade considering the grim situation in the export market. “Now the prices are not very comfortable. They bought it already. We are very costly now.
The forward contracts are also lack-lustre. For November-December forward contracts are executed for about 5 lakh bales. Uncertainty on the crop and yield is impacting the price scenario,” said Shah.
On all-India level, about 40 per cent cotton sowing is yet to take place as rains in most of the regions were delayed.