Chennai: India's cotton exports are poised to hit a two-year peak in February due to the country's competitive pricing amidst a global rally in prices.
For February export contracts for 400,000 bales have been signed, with major buyers in Asia, marking the highest export level since February 2022. Major destinations include China, Bangladesh, and Vietnam, according to Kedia Commodities.
The recent surge in global cotton prices have made Indian cotton particularly attractive for buyers in Asia. ICE cotton prices made a low of $74.77 in Nov 2023 and have risen to around 95.50, up 27.73 per cent. Meanwhile, Indian cotton prices made a low of Rs 26160 per 170 kg and are now trading near to 27635, up by 5.63 per cent. The slower rise was due to lower demand from domestic textile mills.
Further, Indian cotton enjoys a cost advantage over supplies from the United States and Brazil, the world's leading exporters. This advantage is attributed to lower prices and freight costs, driven by India's proximity to importing countries.
According to Atul Ganatra, president of the Cotton Association of India, Indian cotton is currently the most competitively priced in the global market, attracting buyers with its affordability. This has led to a notable uptick in exports.
Projections suggest that India could export around 2 million bales during the 2023/24 marketing year, exceeding earlier expectations of 1.4 million bales. Some traders even anticipate exports reaching 2.5 million bales due to the significant price advantage Indian cotton holds over competitors.
However, despite robust demand and increased export prospects, India's exports are likely to be limited by a reduction in surplus due to an anticipated decrease in local production. Cotton production in India is forecasted to decline by 7.7 per cent in the 2023-24 season, reaching the lowest levels since 2007-08.
