India Feb Cotton Exports Surge to 2-Year High with Irresistible Discounts

India Feb Cotton Exports Surge to 2-Year High with Irresistible Discounts

/ News / India Feb Cotton Exports Surge to 2-Year High with Irresistible Discounts

In Mumbai, the prospects for Indias cotton exports in February appear poised to surge to the highest echelon in a span of two years. The upswing is attributed to a global price rally that has rendered Indian cotton alluring to Asian buyers, a departure from their previous preference for Brazilian and U.S. fiber sources, as conveyed by traders.

Prior to the recent 17-month pinnacle reached by benchmark U.S. cotton futures, India, ranking as the worlds second-largest cotton producer, faced challenges in exporting the fiber. However, with the substantial escalation in global prices, a shift in buyer preference towards India has transpired, according to insights from five traders.

During February, Indian traders inked contracts for the export of 400,000 bales (68,000 metric tons) of cotton—an unprecedented feat since February 2022. The primary recipients of these exports include China, Bangladesh, and Vietnam.

Atul Ganatra, President of the Cotton Association of India, remarked, "Indian cotton is now very competitive. It is the cheapest in the world, and exports are picking up," in conversation with Reuters.

Projections suggest that India could potentially export 2 million bales during the marketing year of 2023/24, surpassing the earlier anticipation of 1.4 million bales. Some traders are even optimistic about the figure rising to 2.5 million bales, underscoring the cost advantage of Indian cotton, priced 6 to 7 cents per lb lower than U.S. supplies, the worlds leading exporter.

Forecasts indicate that if Indian cotton sustains a pricing advantage over the global benchmark, traders could export an additional 300,000 bales in March, as disclosed by a dealer based in New Delhi affiliated with a global trade house.

A Mumbai-based trader notes that the surge in U.S. cotton prices over the past two months, propelled by aggressive Chinese buying, has now prompted Beijing to initiate purchases from India. The trader reveals, "China has made purchases of around 300,000 bales for shipments in February and March."

Vinay Kotak, Director at Mumbai-based Kotak Ginning and Pressing Industries Pvt. Ltd., underscores Indias current advantage in terms of lower prices and freight costs compared to supplies from the United States and Brazil, facilitated by its proximity to importing countries.

Despite robust demand, the potential for Indias cotton exports remains constrained by a limited surplus, as local production is expected to decline this year, warns Kotak. The projection suggests a 7.7% decline in the countrys cotton production from the previous year, reaching 29.41 million bales in 2023/24, marking the lowest since 2007/08, according to the Cotton Association of India.