Banikinkar Pattanayak New Delhi, Feb 19
A panel of secretaries reviewed cotton supplies on Tuesday following a massive pick-up in export registration of late, as demand from China returned just as fears about a smaller US harvest loomed, official sources said on Tuesday.
The panel, comprising the secretaries of the departments of textiles, commerce and agriculture, met weeks after the state-run Cotton Advisory Board had pegged exportable surplus of cotton for the marketing year through September at 8 million bales. Trade executives said if the current demand for the fibre continues unabated, the exportable surplus could be breached in the next 15 days. One bale equals 170 kg.
Although India's cotton export registration for 6.4 million bales so far are still 30% lower than the record-level a year before, the recent pick-up points to a turnaround in China's appetite for imports and a recovery in global demand for textile and garment products. China sources cotton mainly from the US and India and dominates the world's textile export market. India’s cotton export demand has almost doubled since January on fears that production in the largest exporter, the US, would drop due to lower planting and rough weather.
India, the world's second largest cotton supplier, exported a record 12.9 million bales in the domestic marketing year through September 2012 when global prices hit record levels as top user China ramped up purchases. However, global prices started crashing since late last year as China trimmed purchases due to an economic slowdown and swelling inventory, dropping below the domestic level.
Global prices tumbled by 66% until October last year since hitting an all-time-high of $2.197 an lb in March 2011, but fears of a drop in supply drove up prices, which are now 62% lower than the record level. While US cotton futures were ruling at 83.63 cents per lb on Tuesday, a comparable Indian variety cost nearly80cents.Thishasmade exports attractive despite a nearly 10% rise in domestic prices of cotton in many regions since January.
This augurs well for domestic farmers, especially in Andhra Pradesh, where a drop in cotton prices below the benchmark state-fixed prices forced the government to undertake huge procurement operations earlier this year, sparking a storage crisis. However, after the initial pickup, procurement has slowed down now due to the rise in domestic prices, a senior government official said.
The Cotton Corporation of India (CCI), the government's biggest procurement arm, has so far procured 2.26 million bales of cotton in Andhra Pradesh, while farm co-operative Nafed has purchased around four million bales in Maharashtra to prevent distress sales. The CCI had purchased a paltry 7,696 bales across the country during the entire 2011-12 marketing year. Global cotton crop in the year starting August is expected to crash 11% to 23.2 million tonne — the meanest since 1993— as farmers would plant the lowest in 11 years, according to the latest forecast by the International Cotton Advisory Committee (ICAC). By July 2014, global cotton stockpiles would shrink 4.9% to 15.9 million tonne, the first decline in four years, it said. (Source: Financial Express)