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India set to lose out on forex despite likelihood of meeting cotton export target this season

Indian cotton exporters had cancelled orders for around 25,000 bales and postponed shipments of about 200,000 bales by up to a month after a supply shortage pushed up local prices.

Around 30 lakh bales of cotton has been exported from the country so far as against a planned target of some 50 -60 lakh bales this cotton season, according to top officials of the Cotton Corporation of India (CCI). Most traders feel that the country is likely to meet the export targets although some orders were cancelled and some shipments have been postponed. M M Chokalingam, CMD in-charge , CCI, says majority of the shipments have gone to Bangladesh followed by Pakistan and Vietnam. According to him, most of the contracts were signed when the prices were around R38,000 per candy as a result of which the country is likely to lose out forex since the current international prices are in the range of R42,000 per candy.

Indian cotton exporters had cancelled orders for around 25,000 bales and postponed shipments of about 200,000 bales by up to a month after a supply shortage pushed up local prices.

According to market reports, exporters had signed contracts at around 75 cents (per lb) in December and January and since domestic prices had shot up to 84 cents, these traders could not fulfill orders and the contracts to export nearly 25,000 bales to Pakistan and Bangladesh were cancelled. Raw cotton supplies usually peak in India between December and February, pushing down prices.

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According to Pradeep Jain, president, Jalgaon Cotton Ginners Association, the country will meet the export targets this season. Prices in Jalgaon touched R5,500 per quintal as against R6,000 per quintal. And, prices were dropping on increased arrival pressure.

This season, farmers have been delaying cotton sales in the hope of a further hike in prices. The government’s move to scrap high-value currency notes had disrupted trading in a cash-oriented market traders estimating that some farmers sold atleast 155 lakh bales of cotton between October and January.

Pakistan, Bangladesh, China and Vietnam are key buyers of Indian cotton. This season China has not been an aggressive buyer and purchased most of its cotton from US. As per unconfirmed reports, Pakistan has purchased some 20 lakh bales, Bangladesh has purchased around 10-12 lakh bales, China some 15-20 lakh bales. Besides, 5-6 lakh bales have reached other markets. Moreover, traders are coming from Gujarat in large numbers and are purchasing cotton from farmers.

The Cotton Association of India (CAI) has maintained the cotton crop for the 2016-17 season at 341 lakh bales of 170 kg each, same as in the previous month. The CAI has increased cotton consumption for the ongoing crop year to 295 lakh bales against previous estimate of 290 lakh bales.