Price hike disables cotton exports in near future

Exports in cotton standstill, as global prices decrease and domestic prices increase.

The Dollar Business Bureau

In the current marketing year end of September, the exports of cotton is likely to decline by 10% to 6 million bales due to a of hike in domestic prices, which restricted the competitive aspect of the natural fibre globally.

India had exported 6.7 million bales in the marketing year of 2014-15. The top most export destinations were Bangladesh, Vietnam and Pakistan.

BK Mishra, Chairman and MD of Cotton Corporation of India, revealed that so far 5 million bales were exported. However, exports have stopped as global prices are cooling down and domestic prices are increasing.

The estimated total cotton exports will be around 6 million bales in 2015-16, he said.

The prices within the country have increased to Rs. 1,000, touching Rs. 35,000 per cotton candy.

Mishra believes that the high price trends will continue till new crops arrive in October.

The reason behind the rise in prices are the estimates of declining domestic cotton production to 35 million bales in year end 2016 from 38 million bales in 2015. Incessant droughts have been cited as the major reason behind the falling production estimates.

Meanwhile, traders are unwilling to export cotton due to lower margin in the global market.

So far, in 2016, about 2 billon bales of cotton has been exported to Pakistan.

The Cotton Corporation of India, which procured cotton from farmers when rates were low compared to the support prices, has acquired 8,40,000 bales so far in 2016.

With the prices ruling above the support price level, Mishra predicted that any more purchase of cotton was unlikely in the near future.

Of the acquired cotton, CCI has already sold 3,75,000 bales. The rest of the stock will be sold in the coming months.

 

The Dollar Business Bureau - May 09, 2016 12:00 IST
 
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