(MENAFN- KNN India) Mumbai, Feb 19
(KNN)
India's cotton exports are poised to reach their highest level in two years this February.
Traders attribute this surge to the recent rally in global prices, making Indian cotton increasingly attractive for Asian buyers who traditionally favoured sources like Brazil and the United States.
Prior to the recent surge in benchmark U.S. cotton futures, India, the world's second-largest cotton producer, faced challenges in exporting the fibre.
However, with the sudden spike in global prices, buyers have swiftly shifted their focus to India, marking a notable uptick in export activities.
Reports from five traders indicate that Indian traders have inked contracts to export a substantial 400,000 bales (68,000 metric tons) of cotton this February, marking the highest export volume since February 2022.
The primary destinations for these exports include China, Bangladesh, and Vietnam.
"At present, Indian cotton stands out as highly competitive globally, being the most cost-effective option available. This competitiveness has significantly boosted export momentum," remarked Atul Ganatra, president of the Cotton Association of India, in a statement to Reuters.
Ganatra further projected that India could potentially export 2 million bales by the end of the 2023/24 marketing year, surpassing earlier forecasts of 1.4 million bales.
Some traders even speculate that exports could escalate to 2.5 million bales, given that Indian cotton is priced 6 to 7 cents per lb lower than U.S. supplies, which dominate the global market.
Looking ahead, industry experts anticipate that if Indian cotton maintains its competitive pricing edge over the global benchmark, exports could further swell to 300,000 bales in March alone.
This sentiment is echoed by a New Delhi-based dealer affiliated with a prominent global trade house.
The recent surge in demand for Indian cotton is also attributed to aggressive buying from China, a market that previously contributed to the surge in U.S. cotton prices.
According to a Mumbai-based trader, China has already secured purchases of around 300,000 bales for shipment in the coming months.
Vinay Kotak, director at Mumbai-based Kotak Ginning and Pressing Industries Pvt. Ltd., underscored India's current advantage in terms of pricing and freight costs compared to its U.S. and Brazilian counterparts.
This advantage is largely due to India's geographical proximity to major importing countries.
Despite the robust export demand, India's export potential may be limited by a projected decline in local production.
Kotak warned that India's cotton production could witness a 7.7 per cent decline from the previous year, dropping to 29.41 million bales in the 2023/24 season, marking the lowest output since 2007/08, as reported by the Cotton Association of India.
(KNN Bureau)
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