Meeting the Cotton Advisory Board's (CAB) export target of eight million bales this cotton year (October to September) might be a tall order.
Cotton importers in China (which accounts for about 60 per cent of India's cotton exports) have been told if they import, they would have to buy three times that amount from the Chinese government agency. This would hit India's cotton exports. In the second half of 2012, China had reduced cotton imports and it is expected the trend would continue through this cotton year. Through the past few years, China, has created a buffer stock.
Bangladesh, the second-largest importer of Indian cotton, has reduced imports by six to eight per cent.
Earlier, cotton exporters had said exports would fall short of CAB's previous target of seven million bales.
“In the last 10-15 days, cotton exports have been severely affected and concerns remain whether there would be enough cotton export orders through the year,” said Bhadresh Mehta, managing director of Bhadresh Trading Corporation, India’s largest cotton exporter.
“The cotton market has remained static in the last one month. Export orders have been coming in at a very slow pace. But domestic demand has been pouring in. Due to this, prices have remained supported,” said Rahul Kotecha, a Coimbatore-based indenting agent. Since February, prices of the benchmark Shankar 6 have risen two per cent to Rs 851/20 kg, as domestic mills are buying cotton. However, traders don’t see a major rise from these levels.
“This year, I don’t see cotton exports touching eight million bales, due to China's policies,” said D K Nair, secretary general, Confederation of Indian Textile Industry.
However, cotton yarn exports have risen and are expected to hit an all-time high this year, primarily due to China importing major quantities of yarn. This financial year, cotton yarn exports are estimated at about 1,000 million kg, compared with 827.68 million kg in the last financial year.