As farmers are delaying sales of their harvest hoping for higher prices in coming months, Indian traders are struggling to export cotton despite higher production.
Indian traders so far in the new season have contracted 70,000 bales for exports, significantly lower than more than 500,000 bales contracted during the same period a year ago, said a dealer with a global trading house. Bangladesh, Vietnam and China are among the key buyers of Indian cotton.
A report of Reuters says that the limited supplies are keeping local prices significantly above the global benchmark, making overseas sales unviable from the world’s biggest producer of the fibre.
Atul Ganatra, President of the Cotton Association of India (CAI) believes that harvesting of the new crop started last month, but many farmers are not willing to sell. They are holding crops hoping prices would rise like the last season.
He further added that farmers received record prices for their last season’s crop, but the new crop is unlikely to get the same price as local production has risen and global prices have fallen.
Cotton prices hit a record high of Rs. 52,410 per 170 kg in June. But prices have corrected nearly 40 per cent from the peak.
Ashwini Bansod, Head, Commodities Research at Phillip Capital India Pvt. Ltd., said that farmers used proceeds from the last few seasons’ harvest to create storage facilities, which they are using to store the crops.
Despite higher output, spot markets are receiving nearly a third lower in supplies than normal, industry officials estimated.
India could produce 34.4 million bales of cotton in the 2022-23 season that started on 1st October, up 12 per cent from a year ago.
Source: Apparel Resources