NEW DELHI (Commoditiescontrol) – Chinese demand for Indian cotton is likely to remain weak in next marketing season 2015-16 because China has large stock of cotton. But India will receive regular demand of cotton yarn from China. Mr. I. J. Dhuria, Director (Material) Vardhman Group, in an exclusive interview with commoditiescontrol.com explained why he is optimistic. He also spoke on various issues related to cotton in next season.....here are excerpts from the interview:
Your assessment of Indian cotton export scenario in global market during the next season starting from 1 October.
Indian cotton export will depend on how prices move in domestic and international markets. In domestic market, if prices fall in early period of the season, exporters will offer aggressive price for export. The exporters will be able to get good export orders at comfortable price. Currently, Cotlook index is moving at US cent 70.20/pound while Indian cotton is available at US cent 67.25/pound. Indian export was 70 lakh bales in the current season 2014-15 against export of 112 lakh bales in last season 2013-14. If Indian export get comfortable margin, export will be better. But I cant predict any figure.
How much margin Indian exporters expect for international trade?
If Indian exporters get margin of US cent 5/pound, export will be viable. Although, they are not getting such margin. They are getting a margin of 3 US cent. In the next season, Cotlook Index will come down as low as US cent 65-66/pound in December. While, Indian cotton will be priced not less than US cent 62/pound on the basis of minimum support price (MSP) fixed by central government for raw cotton (Kapas). Kapas price will fall below MSP for long time because Cotton Corporation of Indian (CCI) will start purchase as per it’s mandate.
How do you see demand for cotton from China in the new season?
China still has large stock so they will not need too much cotton. But the country will import uncontaminated cotton originated from US and Australia. Indian cotton does not qualify on this term because of human intervention in harvesting and processing. On the other hand, cotton of US and Australia origin harvested and processed by automatic machines so their cotton is uncontaminated.
What about export of cotton yarn from our country?
Indian spinning mills produce around 35-35.5 crore kg cotton yarn on a monthly basis. But domestic consumption is around 21 crore kg per month so we have around 15-15.5 crore kg surplus material for export. China is purchasing cotton yarn on regular basis. Chinese mills prefer Indian yarn due to lower cost. Chinese cost of production is increasing at a fast pace. Currently, cotton yarn (30 count combed) is priced at USD 2.80-2.90/kg. In next season, we can expect better export of yarn compared to cotton but we cannot expect price increase due to stiff competition from other supplier countries. But, recent devaluation of Indian rupee against US dollar has given an edge to Indian exporters.
How do you see overall global cotton market during next season?
At global level, the industry is facing glut situation. World has huge cotton stock which is sufficient for 10 months consumption. Although, scenario will not be so gloomy as it was in the current season.
What is your estimation for domestic production and consumption?
Total acreage dropped to 112.68 lakh hectares (ha) in the current kharif season from 122.50 lakh ha of last year. The drop of around 8 per cent in acreage will not impact the production severely because of better yield. If Gujarat gets 1-2 rain in next fortnight, cotton crop will boost in both term of production and quality. Better weather in Punjab and Haryana will reduce fear of crop loss due to whitefly. Cotton crop affected due to the disease as cloudy weather prolonged. As per estimate a fortnight ago, cotton crop may be affected by around 10 per cent. Bur recent western wind has reduced affect of whitefly.
What’s your estimate for cotton production?
Cotton production will not fall too much. It may reach at 370 lakh bales. Cotton Association of India (CAI) has estimated cotton production in the current season 2014-15 at 382 lakh bales.
(By Commoditiescontrol Bureau; +91-22-40015533)
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