Cotton exports decline sharply

Mumbai, June 10 (UNI) With the rupee appreciating against US dollar and growing demand for the imported long staple cotton by the mills, cotton exports from the country have dwindled sharply as very few fresh contracts were entered into during the last few weeks.

According to sources, appreciation of the domestic unit against US dollar to the extent of about 8 to 10 per cent has made matters worse for the Indian cotton exporters. On the other hand, it has facilitated more imports.

With superior long staple cotton being available at cheaper rates, several mills are reportedly going in for imported cotton, which they find it preferable cost-wise and quality-wise. If the present scenario of dwindling exports and rising imports continue for any length of time, it may prove detrimental to the domestic cotton industry, sources said.

Exporters do not appear to have booked any fresh orders since the domestic prices have gone out of parity with global prices and because of the substantial gain made by rupee against US dollar, they said.

One of the reasons being attributed to the rise, despite a sizable carry over stock and a record production expected this year, is the fact that ready supplies are falling short of demand.

Indian cotton is stated to have lost its price competitiveness in the world markets, as good quality cotton from US and West African countries are quoted appreciably lower, the International Cotton Advisory Committee (ICAC) said.

Last year, India cotton had offered serious competition to US cotton in a major market like China and had succeeded in taking a sizable share of Chinese imports at the expense of US. But this year, the situation seems to have been reversed, with Indian exporters finding it extremely difficult to compete with US. Also, imports by China are forecast to be lower this year at 2.85 million tonnes against 4.20 million tonnes last year, according to the ICAC.

Ginners said they are reluctant to process all the cotton lest the prices may crash and the farmers are also holding on to a large part of their cotton for the same reason.

UNI