Cotton exports fail to pick in December, local prices triumph

Cotton exports declined in December with shipment of 1.4 million bales (170 kg each) as against 1.6 million bales exported a year ago in a situation where market activity was disrupted by demonetisation of high currency notes. The slowdown this year appears to have been played by rising prices in domestic market and lower than expected harvest due to pink pest attack in major cotton growing regions. Contracts are cancelled to take advantage of racing domestic prices in a period when prices do not tend to rise generally. Thus, the first three months of 2017-18 cotton marketing year, recorded shipment of 2.11 million bales as against 2.16 million bales in the corresponding months of previous year.

It also suggests that the cost of cancellation of contracts is much lower than the returns in selling in domestic market. The price realization averaged INR106 a kg or US cents 75.54 per pound in December as against the Cotlook Index ‘A’ averaging at 88.50 per pound and spot Shankar-6 at US cents 81.02 per pound for the month.  November had FOB values average US cents 90.68 per pound US cents 15 higher than local prices. The same reversed in December where FOB values were US cents 5 lower than local numbers.

Bangladesh, Vietnam and China were the largest importers of cotton with combined volumes at 1.13 million bales amongst the 21 countries that imported cotton from India in December. Shipment to Pakistan more than halved from 93 thousand bales last December to just 44 thousand bales this month.

New importers this December include Italy, Djibouti, Switzerland, Germany and Congo although small quantities were exported. No exports were done to these destinations in December 2016.

Among major cotton buyers, Taiwan, Turkey and Singapore substantially reduced their import this December while a dramatic spurt was seen in shipment to Mauritius.

Source: Fibre to Yarn Export Statistics – India report of December 2017