Fibres and Yarns | News & Insights

Cotton exports could fall as local demand rises

Published: October 9, 2021
Author: Manali bhanushali

India’s cotton exports could fall by 36% in 2021-22 from a year ago, as domestic demand has been rising amid limited supplies after carry-forward stocks nearly halved from a year ago, industry officials said on Thursday.

Lower exports from the world’s biggest cotton producer could support global prices, which jumped to their highest levels in a decade on strong demand from top consumer China.

“Exports could go down to 5 million bales in the new season since local demand has been rising,” Sumeet Mittal, general manager for India cotton business at Louis Dreyfus Company, said in a webinar organised by the Cotton Association of India.

The country exported around 7.8 million bales in 2020-21, the highest in eight years, as the state-run Cotton Corporation of India continuously sold from its warehouses keeping Indian prices competitive, he said.

Higher exports and local demand have depleted carry forward stocks to 6.5 million bales in the new season that started on October 1, from 12.5 million bales a year ago.

Good demand from local mills and a rally in global prices have lifted domestic prices to a record high this week, tapering the advantage India had over other suppliers.

“Good quality cotton is not available right now for exports. From November, supply of good quality cotton would improve, and prices may come down because of supply pressure,” said a Mumbai-based dealer with a global trading firm.

Leading cotton producing states including Gujarat, Maharashtra, Telangana and Andhra Pradesh received heavy rainfall in September.

The production in the new season could fall as rainfall badly affected early-sown crop in all key producing states, said Chirag Patel, chief executive office at exporter Jaydeep Cotton Fibers Pvt Ltd.

“Crop yields and quality of crop are going to be affected by rainfall. Cotton harvested in the first picking is likely to be of poor quality.”

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