Cotton exports target appear hard to achieve this year

Cotton exports surged 151% in March with shipment of 12.5 lakh bales (170 kg each) as against just less than 5 lakh bales exported in March 2017. The increase was largely due to a low base when cotton marketing activity was hampered by the demonetization of currency note which caught the market by surprise on 8 November 2017.

Thus, the first six months of 2017-18 cotton marketing year, shipment aggregated 5.66 million bales as against 4.82 million bales in the corresponding months of previous marketing year. The export target has been fixed at 7.00 million bales this season. With almost 80% achieved in the first six months, the target, prima facie, appears achievable. But, looking back at past trends in the other six months (April to September), last year 1.9 million bales were exported. This was a large volume in that part of the year because shipments were postponed due to low trading activity during the pear marketing season.

In similar comparison, shipment in the latter half of 2015-16 season was less than 1 million bales, And it being a normal year with good production, total exports were at 6.4 million bales. If the same is repeated this year too, then 5.66 million bales in first half and another 1 million bales in the second half can bring total exports to 6.7 million only. Plus, this season harvest is affected by Pink Boll worm infest in major cotton growing areas of Maharashtra. Thus, production is estimated at 34 million bales in 2017-18 marketing year.

Domestic consumption is about 3 million bales per month which hardly leaves exportable surplus of local crop. Thus, achieving the cotton exports target of 7 million bales appear bleak.

In March, export price realization averaged INR118 a kg or US cents 83.64 per pound as against the Cotlook Index ‘A’ at 92.19 per pound and spot Shankar-6 at US cents 80.30 per pound. The rise in March export was also supported by lower export price, although domestic prices were up during the month. Bangladesh was the largest imported of India cotton in March, followed by Pakistan and Malaysia.

Cotton exports jumps as domestic prices recede to sub-80 cents