Cotton Exporters Bullish On High Global Prices, Feels Cotton Association Of India.

Even as international demand for cotton weakens, exporters who have been given export allocation for over 1,58,461 tonne are bullish about the market. This is owing to domestic cotton prices, which are at Rs 37,000 per candy, lower by over 10% compared to international cotton prices.

Cotton Association of India president Dhiren Sheth said that export was good for the industry. "International cotton prices are bearish but Indian exporters have an advantage owing to cheaper domestic prices," he said. On Wednesday evening, the Directorate General of Foreign Trade (DGFT) published the data of the quantity allocated to over 227 applicants for export.

Out of total export quota of 1,70,000 tonne for the year ending September, the government allocated 1,58,461 tonne. The rest of the quantity, which is 11,539 tonne, has been sequestered because 84 exporters have moved the court against the stringent export norms. "Once the final orders are received , further action will be taken either to allot them as per the orders of High Court or in the alternative , allot the quantity (or the balance quantity as the case may be) among the two public sector applicants before us namely Cotton Corporation of India (CCI) and Minerals and Metals Trading Corporation ( MMTC )).

Such contingent allotment becomes necessary because the government has mandated export of these additional 10 lakh bales in the current cotton year and neither there would be time to go through another round of allocation by inviting fresh applications, nor such a small quantity be commercially viable for a fresh round of allocation ," the DGFT notification said. China, Taiwan, Bangladesh and Pakistan would be major markets for Indian cotton, according to Mumbai exporters. "Internationally, cotton prices are ruling at 120 cents per pound (one pound= 453 gm), which is equivalent to Rs 41,500 per candy. Gujarat's Shankar 6 spot price on Thursday was at Rs 37,000 per candy.

This given Indian exporters an edge," said a Mumbaibased trader. However, ginners were sceptical on the demand and the pricing in the international market. "India sellers are quoting 120 cents per pound to Bangladesh exporters while Chinese and Hong Kong exporters are being quoted 126 cents to 130 cents per pound. The buyers' rate has not come who are watching the development in India. Indian cotton prices will fall by Rs 5,000 a candy by September owing to poor demand in the domestic market and arrival of new crop by September," said Saurashtra Ginners association president Bharat Vala. Multinational cotton companies Cargill India, Olam Agro India , Glencore Grain India, Louis Dreyfus Commodities India, AWB India apart from India's leading exporters Bhadresh Trading Corporation, Gill & Co, Khimji Visram & Sons (Commission Department), Mittatex Exports , and Sunny Trexim got the highest export allocation of 1,601.40 tonne.

Source : economictimes.indiatimes.com