Riding high on the cost advantage in the international market, India has already exported about 29 lakh bales (of 170 kg each) of cotton by the end of January 2021, according to the Cotton Association of India (CAI). This is nearly 60% of the country’s total projected cotton shipments for the season.
“India’s exports of cotton fibre are projected to be around 54 lakh bales for the season 2020-21 (October to September). This is 4 lakh bales higher than the previous year 2019-20,” said Atul Ganatra, President, CAI.
Notably, CAI data shows that in the initial four months of the season -October 2020 to January 2021 – cotton exports have been the highest in the past three years. During the comparable period in 2018-19, cotton exports were reported at 24 lakh bales and in 2019-20 it was at 20 lakh bales. Traders attributed the jump in exports to the lower prices and better quality of the initial crop.
The benchmark GUJ ICS-105 (29mm) variety quoted at Rs 43,600 a candy (of 356 kg of processed ginned cotton) in the spot markets, which was Rs 40,500 on December 5, 2020. The prices hovered between Rs 37,500 and Rs 40,200 during the early months of the season i.e. October and November 2020.
According to cotton exporters, Indian cotton prices are lower than international prices. And buyers are entering into contracts even at the current prices. Higher supplies driven by rising inventories from the previous season have capped the Indian prices.
Cotton balance sheet
Meanwhile, in its crop estimate for the month of January, CAI has retained the crop size for the year at 360 lakh bales. Of the total projected supply of about 499 lakh bales for the season, first four months have reported total supply of 389.25 lakh bales. Opening stock at the beginning of the cotton season on October 1, 2020 was estimated at 125 lakh bales. Of the 499 lakh bales supply projection, barring 125 lakh bales of opening stock, crop size for the current season is likely to be 360 lakh bales and 14 lakh bales of imports.