Indian Textile Mills are ramping up imports of cotton
Mills in India, the world's second biggest cotton producer have already imported 500,000 bales and have signed contracts for around 1 million bales at 75-80 cents per lb, compared with the local price of about 88 cents. This can be attributed to the following two reasons.
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Mills in India, the world's second biggest cotton producer have already imported 500,000 bales and have signed contracts for around 1 million bales at 75-80 cents per lb, compared with the local price of about 88 cents. This can be attributed to the following two reasons.
a. Tight Domestic Supplies of Cotton
- Poor rainfall in top producing Gujarat State. Saurashtra and Kutch regions of Gujarat, the country’s largest producer, have received 72% less than the usual rainfall by this time
- A rally in Soyabean prices is prompting some farmers to ditch cotton for Soyabean.
- Record export of good quality cotton earlier this year, with lower quality cotton left this year.
- Harvesting is getting delayed because of late arrival of Monsoon. If it gets delayed beyond Sep, the domestic cotton prices will sky rocket.
b. Lower Prices Abroad
- Domestic cotton prices are ruling around 88 cents per pound, freight on board, around 14% higher than the African fibre and 10% than the crop in the US, the world’s largest cotton exporter
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