Financial Daily from THE HINDU group of publications
Tuesday, Dec 06, 2005
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Cotton exports likely to top 20 lakh bales
Chennai , Dec. 5
COTTON exports are likely to top 20 lakh bales (of 170 kg) during the current season (October 2005-September 2006) with contracts already sewn up for shipments of 10 lakh bales. Cotton supply is likely to be adequate, despite reports of damage to the crop in some parts of the country due to rains.
Pakistan, in particular, is keen on importing cotton from India but the mills there favour its transportation by road.
"Pakistan could import 5-6 lakh bales. If the Centre allows us to send the consignment by land route, it would be more beneficial," said industry sources.
Besides Pakistan, countries such as Bangladesh, Sri Lanka, Taiwan and Indonesia are looking at India for their cotton demand.
China, which has contracted to import small quantities, could import more.
According to the International Cotton Advisory Committee (ICAC), cotton imports by China could double this year to around 3.2 million tonnes (mt). It has also estimated Pakistan crop to be lower by 11 per cent.
"We expect the cotton crop this season to be in the excess of 250 lakh bales. ICAC has projected global production to be five per cent lower, while consumption is likely to rise four per cent. This is likely to benefit our growers, who will get good prices besides increased production," said Mr D.K. Nair, Secretary-General, Confederation of Indian Textile Industries (CITI).
The industry sources, however, said there shouldn't be any surprise if the actual production turns out to be around 235 lakh bales.
Last season, production was at a record level of 243 lakh bales.
"The cotton crop has been somewhat hit in Andhra Pradesh, Maharashtra and Haryana. On the other hand, the crop is better in Gujarat and Punjab," they said.
"But the current price trend does not justify the production scenario. We feel it is high and people in the market tend to show the rise in extra long staple cotton prices as a reason," the sources said.
"While farmers will get a good prices, the prices are not too high for the mills. There is a resurgence in the textile sector and more spindles are coming up," said Mr Nair.
"The mills are not complaining of higher prices because there has been a corresponding rise in yarn rates," the sources said.
On Monday, H-4 Madhya Pradesh variety was quoted at Rs 17,400 a candy (355.56 kg) compared with Rs 15,600 in early September. The popular Shankar-6 variety ruled at Rs 18,000 against Rs 16,600 during the same period.
"There has been a carryover stock of 72 lakh bales. Coupled with the projected production, over 300 lakh bales of cotton will be available. Therefore, we feel the rise in prices is not justified," the sources said.
Apart from the domestic supply, there could be 5-6 lakh bales of imports, mainly the extra-long staple variety, according to Mr Nair.
Arrivals have picked up and are currently hovering between one and 1.5 lakh bales daily.
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