India’s cotton exports, which had slowed in November due to adverse currency movements and volatile prices, are showing signs of a revival this month due to a rise in global prices post a truce in the trade rift between the US and China, traders said.
“In the last couple of days there have been some enquiries as domestic prices have now become viable,” said Vinay Kotak, director of Kotak Commodities.
Since October, deals for the export of over 2.5 mln bales (1 bale = 170 kg) of cotton have been signed, trade officials said. Of the total quantity, around 1.5 mln bales have already been shipped, while the rest will be exported in Dec-Jan. The deals, struck at 84-86 cents per pound, are for exports to Bangladesh, Vietnam, Indonesia, Pakistan, and China. The current season started October began with a bang, as traders sealed export deals for 500,000 bales in the very first week. However, changing dynamics due to crop uncertainties and US-China trade tensions changed the equation and slowed the momentum.
Through most of November, cotton exports were negligible as elevated prices in domestic markets negated the positive impact of the rupee’s fall to a record low against the US dollar in the past few weeks.
“We did not have a single enquiry in most of November,” said Nayan Mirani, partner of Mumbai-based KhimjiVisram & Sons.
Ahmedabad-based exporter Dharmendra Jain agreed, saying export enquiries in November were negligible, at 100,000-200,000 bales.
In Mid-October, the rupee had hit a record against the dollar, a major positive for exporters. However, domestic prices continued to trade much higher than benchmark cotton prices on Intercontinental Exchange.
Though the rupee strengthened in late November, domestic cotton prices fell. A simultaneous rise in global prices of the fibre made exports viable. Recently, prices of cotton on Multi Commodity Exchange of India hit a six-month low of 21,200 rupees a bale, while the benchmark contract on Intercontinental Exchange hit a three-month high of 81.85 cents a pound. In 2018-19, cotton exports from India are likely to be at 5.1 mln bales, lower than 6.9 mln bales last year, according to Cotton Association of India.