Indian cotton exports pick up but lack of containers proving to be a hurdle

With Indian exporters offering cotton to overseas buyers at a competitive price, demand for the natural fibre has gathered pace. At least six lakh bales—one bale is 170kg—of cotton have been exported since the start of the new season in October but exporters are facing problems due to a lack of containers or vessels to export.

The cotton season in India runs from October to September.

“We have heard from our trade circles that six lakh bales have been exported. Maybe, some 25,000 to 50,000 bales are held up at the ports for shipment,” said Anand Popat, a trader of raw cotton, yarn and spinning waste.

Cotton Association of India (CAI) President Atul Ganatra confirmed that six lakh bales had been exported, so far. “It is possible to export eight lakh bales of cotton this month (October),” he said.

However, the lack of containers or ships is slowing things down. “Shipments are slow as containers are not available. Cotton shipments between 25,000 and 50,000 bales are pending,” Popat said.

Ganatra said they met commerce ministry officials on October 26 and they promised to do the needful.

Cotton shipments, particularly from Gujarat, have got held up as consignments such as groundnut oil and castor are getting priority. “There is good demand for groundnut oil from China and they seem to be getting priority,” Popat said.

Solvent Extractors Association of India Executive Director BV Mehta said one or two shipments could have faced problems and the issue should not be generalised.

China has developed a sudden appetite for various commodities, including from India, and exporting them from Gujarat ports is cheap, sometimes even cheaper than moving goods within the country.

Exporting cotton to China works out cheaper than transporting it to textile mills in southern India. This is because ships from China that come laden with consignments such as machinery prefer to take shipments at a discount than returning empty.

The drop in availability of containers could also be due to a decline in imports from China this year, particularly after the fierce face-off between the Indian Army and Chinese troops in Ladakh’s Galwan valley.

Indian cotton is in demand in the global market for its competitiveness. Traders are eyeing higher exports of over 60 lakh bales this time against 50 lakh bales in the previous seasosn.

China, Vietnam, Indonesia and Bangladesh are looking to buy cotton from India. The country’s Shankar-6 variety, which is on par with global standards, is being offered at around Rs 40,000 a candy (356 kg). Countries such as the US and Brazil are asking more than Rs 42,000.

The Cotton Corporation of India (CCI), which has nearly 60-lakh bale carryover stock from the last season, is offering cotton to various destinations abroad ranging from 73.45 US cents a pound (Quingdao, China) to 78.15 cents (Chittagong, Bangladesh).

These are being offered on cost and freight basis, which means it includes freight cost. This is against 73-74 cents a pound that cotton from the US or Brazil costs at the port of loading.

Besides, traders are also buying from CCI and exporting, sources said.

Indian cotton also enjoys the advantage of freight being nearer to the port of delivery. “This time, cotton arrivals are of good quality in addition to our competitiveness,” said Popat.

Daily arrivals of raw cotton (kapas) had topped one lakh bales, CAI’s Ganatra said.

An exact estimate of the cotton crop is yet to be made, though Popat said it could be higher than last year’s 350 lakh bales.

CAI’s will come out with its estimates on November 6 after its crop committee meeting.

The Cotton Advisory Board (CAB), a body which has farmers, traders, exporters and industry representative, is also expected to meet shortly to make its estimate.

The Ministry of Agriculture data, however, showing a two percent drop in the area under cotton this year to 129.50 lakh hectares against 133.73 lakh hectares last year.

This year, the sector will also face an additional burden carrying a record 107.5 lakh bales opening stocks.

On October 28, December cotton contracts on the Multi Commodity Exchange ruled lower at Rs 19,930 a bale against the previous day’s close of Rs 20,010.

Source: Money Control