Indian Cotton Exports Up, Imports Down
2 March 2006 Competitive cotton prices have driven Indian exports up while limiting imports by almost 1 million 170 kg bales, according to the US Department of Agriculture’s Foreign Agriculture Service (USDA-FAS).
Production for the 2005-06 marketing year (August-July) in India has fallen to 23.5 million bales based on smaller than expected arrivals, most notably in Maharashtra and the southern states, as heavy October and November rains caused considerable crop damage.
Market arrivals through mid-February are estimated at 16.7 million bales, compared to 17.8 million in the same period last year. These also were affected by the late season rains. The current pace of arrivals — estimated at around 150,000 bales per day through April — is not a satisfactory amount in some states.
With expected higher late season market arrivals, marketing year 2005-06 production is likely to reach 23.5 million bales. According to India’s Ministry of Agriculture, this production will take place on 8.85 million hectares in 2005-06, compared to 8.92 million in 2004-05.
Domestic cotton prices remained firm throughout the season on strong international cotton prices, and despite the recent increase in the pace of arrivals, the prices should remain strong due to high foreign and domestic demand.
According to market sources contacted by USDA-FAS, about 2.3 million to 2.5 million bales of Indian cotton have been contracted for exports through the third week of February. Of this, about 1.5 million to 1.8 million bales have already been shipped, with the remaining quantity likely to be shipped through April.
The major export destination was China (60% to 70%), followed by Bangladesh, Pakistan, Taiwan, Indonesia, and other Far East countries. Almost 70% of the exported cotton was the Shankar-6 (27-29 mm) variety at prices ranging between US $0.50 to $0.57 per pound. Although export demand remains strong, the lack of availability of quality cotton will constrain exports, which are expected to reach 2.6 million bales through July 2006.
India’s cotton imports in the 2005-06 marketing year have so far been limited to extra long staple (ELS) cotton and some specialty cotton. Subdued demand for fine yarn from ELS cotton in the international market has tempered import prospects. Consequently, USDA-FAS now expects 2005-06 imports to be 700,000 bales lower than originally anticipated.
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