US Bullish On Cotton Shipments To India

Market News

US Bullish On Cotton Shipments To India

Faced with a bumper cotton output of 16 million bales, the United States is making special efforts to enhance its raw cotton exports to India. US cotton production is set to go up 25% in the marketing year (beginning August) against 12.9 million bales recorded last season. One US cotton bale equals 220 kg, while one Indian cotton bale weighs 170 kg. Mills in the US consume only 25% of cotton produced and the rest is exported.

In the first two months of the US cotton marketing year, exports to India increased over eight times to 4.79 lb (52,000 bales). In fact, the US has already surpassed last marketing year's total cotton export of 2.83 lb.

India, the world's largest producer of cotton, started importing large amounts of raw cotton. The Cotton Advisory Board expects India to import 15 lb in the cotton year ended last month but the industry estimates it to be higher, at about 18-20 lb.

Bruce A Atherley, Executive Director, Cotton Council International, said the initial response from Indian cotton mills has been very positive due to the price difference. Last year, he said, Vietnam was the largest importer of US cotton at 19.32 lb followed by China, India and Bangladesh.

MB Lal, former Chairman of the Cotton Corporation of India and MD of Shail Exports, said imports of cotton would increase if domestic prices remain artificially higher.

"The government should restrain trade bodies from making crop estimates as they initially mark up production to portray huge surplus stock for them to export. As the season progresses they suddenly revise the estimate and create a shortage in the market," he said. KN Vishwanathan, VP, Indian Cotton Federation, said prices in the southern states are ruling high despite the start of arrivals due to the lorry owners' strike. In fact, he said, southern mills have not been getting price quotes from Gujarat and Punjab for the last fortnight and this has made cotton costlier in the southern states.

Some South Indian-cotton ginning associations plan to lead a delegation to Lanka and explore the possibility of stocking imported cotton in that country.