Cotton export continues in May in smaller volume
Cotton export in May, the eighth month of the 2021-22 marketing season, dwindled to 2.12 lakh bales worth INR864 crore or US$112 million. During the month, Bangladesh was the largest importer of Indian cotton, followed by Oman, Indonesia, UAE and Vietnam.
Total export in first eight months of 2021-22 marketing season was at 50.26 lakh bales worth US$15,894 crore or US$1,992 million. Compared with the corresponding months of 2020-21 season, exports were down 42% in volume and 23% in US$ term.
Export price realisation for cotton averaged INR239 a kg or US cents 140 per pound in May. This was much below Cotlook A index, the global spot price benchmark and also compared with the domestic spot price for benchmark Gujarat Shankar-6. During the month, Cotlook averaged US$164 per pound while Shankar-6 also averaged US cents 164 per pound.
Handling crisis
The industry demand to ban cotton export was unimpressive as the government argued that it was too late and will be ineffective to rein in inflation in domestic cotton prices. Prices of cotton crossed over INR100,000 per candy mark while export price averaged INR85,400 per candy.
The crux of this crisis (cotton price inflation) is the faulty and belated release of official crop size estimates. The first official advance estimates of 2021-22 kharif crop released in September had pegged cotton crop at 362.2 lakh bales against the target of 370 lakh bales. Within five months (in February), the second advance estimates revises the crop size down to 340.6 lakh bales while spot prices had taken off the runway at the beginning of the season. Ridiculously, the third advance estimates of mid-May (within three months) pegged cotton crop significantly down at 315.4 lakh bales.
Such faulty and unscientific estimates have been plaguing both the industry as well as trade. There is also no justification of the huge amount of money that is spent to collate farm data. One should remember that textile is one of the major foreign exchange earner (3% of total merchandise export) and also the second largest employer in the country.
