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Imports of cotton zoom northwards, exports southwards
08 Apr '09
2 min read
India which had exported around 8 million bales (1 bale=170 kg) in the last cotton season is expected to import 1 million bales in the current and ongoing cotton season. The irony comes from the government decision to increase the Minimum Support Price (MSP) by 25-40 percent.
While global cotton prices had touched four year lows since the unfolding of the economic crisis and the beginning of the new cotton season, Indian cotton prices have moved northwards, thanks to the increase in MSP, which has led to this unprecedented growth in imports.
This has compelled Indian textile mills to import sizeable quantities of cotton from overseas markets, from the US and Pakistan in particular, due to the big price disparity prevailing in the domestic and international markets.
To add to the woes of the cotton textile mills, prices of cotton in the open markets have now started inching past the MSP prices as the state agencies like Cotton Corporation of India (CCI) and Nafed have mopped up a large number of bales from the market.
Experts had predicted an artificial shortage of good fibre length and quality cotton in the markets since most of the good cotton is locked away in the warehouses across India of these two state procurement agencies, who between them are sitting on a stock of 29 million bales.
This has led to a growth in prices of a few varieties of cotton, which are now quoting above MSP levels, notably of the Gujarat grown Shankar-6 variety, which is now priced at Rs 1,500 per ton above the MSP price of 28,500 per ton.
Fibre2fashion spoke to Kishore Shah, President of Central Gujarat Cotton Dealers Association who said that, “Due to increase in MSP prices, exports have become difficult and even at current market prices Shankar-6 variety is costlier by 3 cents, comparable with a US cotton variety”.
While global cotton prices had touched four year lows since the unfolding of the economic crisis and the beginning of the new cotton season, Indian cotton prices have moved northwards, thanks to the increase in MSP, which has led to this unprecedented growth in imports.
This has compelled Indian textile mills to import sizeable quantities of cotton from overseas markets, from the US and Pakistan in particular, due to the big price disparity prevailing in the domestic and international markets.
To add to the woes of the cotton textile mills, prices of cotton in the open markets have now started inching past the MSP prices as the state agencies like Cotton Corporation of India (CCI) and Nafed have mopped up a large number of bales from the market.
Experts had predicted an artificial shortage of good fibre length and quality cotton in the markets since most of the good cotton is locked away in the warehouses across India of these two state procurement agencies, who between them are sitting on a stock of 29 million bales.
This has led to a growth in prices of a few varieties of cotton, which are now quoting above MSP levels, notably of the Gujarat grown Shankar-6 variety, which is now priced at Rs 1,500 per ton above the MSP price of 28,500 per ton.
Fibre2fashion spoke to Kishore Shah, President of Central Gujarat Cotton Dealers Association who said that, “Due to increase in MSP prices, exports have become difficult and even at current market prices Shankar-6 variety is costlier by 3 cents, comparable with a US cotton variety”.
Fibre2fashion News Desk - India
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