Cotton export dwindles this season
Cotton export or shipment in March, the sixth month of the 2021-22 marketing season, was 4.26 lakh bales worth INR1,563 crore or US$208 million. During the month, Bangladesh was the largest importer of Indian cotton, followed by Vietnam, Oman, Indonesia, and China.
Export price realisation for cotton averaged INR216 a kg or US cents 130 per pound in March. 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$142 per pound while Shankar-6 was at US cents 137 per pound.
Total export in the first six months of 2021-22 marketing season was at 45.25 lakh bales worth US$13,894 crore or US$1,873 million. Compared with the corresponding months of 2020-21 season, exports were down 31% in volume and 10% down in US$ terms.
With an imminent ban on cotton export, it may be assumed that exports will finish at less than 50 lakh bales this year. As prices of cotton are likely to touch as high as INR100,000 per candy soon, the textile industry is all urging the government to take appropriate steps to ease the challenges of exorbitant prices of cotton and thereby of cotton yarn in the next five months of the current season.
However, this appears to be too late and any step may not result in any easiness. The government has been continuously failing to predict or estimate the crop size, which is the most important key to price driver for the season. Even the agencies attached to the cotton business have been over or underestimating the crop size, and too very late. In April, the Cotton Association of India had cut down domestic cotton production further to 335 lakh bales, while the initial estimate was about 360 lakh bales.
For the government, just announcing the MSP for the crop does not end the matter. One should remember that textile is one of the major foreign exchange earners (3% of total merchandise export) and also the second-largest employer in the country.
