Cotton export appears unpromising this season
Cotton export in the first month of new marketing year 2019-20, October – was not impressive at all on cotton export despite all estimates pointing towards a much high harvest this year. The 2018-19 marketing year had also ended with disappointed numbers as only 5.46 million bales could be exported in the 12-month period ending September 2019.
In US$ term, exports declined almost 40% YoY. In October, only 1.54 lakh bales were shipped worth US$42 million or INR298 crore. This implied an average price realization of US cents 72.99 per pound or INR113 a kg. This was lower than Cotlook A index and average domestic spot prices for benchmark Gujarat Shankar-6 cotton variety. In 2018-19, the realization had averaged INR127 a kg or US cents 82.00 per pound as against Cotlook A at US cents 81 per pound and domestic spot at US cents 80 per pound. Thus, Indian cotton was slightly dearer than global benchmark.
In October, Bangladesh was the largest importer of Indian cotton, followed by Vietnam and Indonesia. Iran was fourth largest market followed by China. Thus, the top five accounted for about 98% of cotton export from India. No shipment was recorded to Pakistan, for the second straight month. It was one of the largest importers of Indian cotton in recent months. In October 2018, shipment to Pakistan was worth US$18 million with volumes at 59 thousand bales.
Vietnam is quickly emerging as a major destination for Indian cotton. It has overtaken China to some extent. However, the season of 2018-19 was not so impressive and reason needs separate investigation. In 2015-16, shipment to Vietnam was 6.23 lakh bales which jumped to 9.60 lakh bales in 2016-17 and further surged to 14.50 lakh bales in 2017-18. In 2018-19, it pulled back to just 6.74 lakh bales.
China, another major cotton buyer, has reduced its need from India steadily. However, large volumes are shipped in November and December, so October could be negligible as of now to look at export to China.
