Glee back on faces of cotton farmers

11 Feb '10

3 min read

After reining in spending for over a year, consumers seem once again prepared to spend on new clothes, curtains, towels and upholstery. Due to this, good earning prospects have been generated for cotton farmers in India, who are gaining on account of vigorous exports along with budding domestic prices, as textile companies queue up to acquire raw material.

India being the second largest producer of cotton worldwide, offers best rates globally. In 2009 in spite of the crop being adversely affected on account of deficient monsoon and dry weather, country's area under cotton cultivation crossed a record 10 million hectares.

Textile Commissioner AB Joshi stated that, as against exports of 5 million bales during entire last year, the country's exports this year have already touched 3 million bales by now, that is by mid season and added that cotton exports are advancing at a sound rate.

According to the officials of the industry body, Cotton Association of India, it is anticipated that exports in its totality will reach 6.5 million bales by end of 2009-10 season.

China plays dual role as being leading importer for India's cotton as well as is largest garment and textile exporter to United States. US, the world's foremost cotton producer exports cotton to China and in turn imports fabrics and clothing.

Prices have shored up despite that, at beginning of the new marketing season, which is the period between October and September, there was sufficient cotton to carry on for three and a half months, and also added to it by producing about 30 million bales. This has mainly happened due to a surge in demand from companies owing to sharp recovery in demand for textiles during past few months.

Otherwise there is no reason in the domestic market which would lead to simulated price rise and also that there is no apprehensive buying or selling as everyone is certain that there will once again be a good yield in the next cotton season.

Till now it has been a good period for farmers and they have been consistently bringing their crop to the markets. Appreciably, prices are also higher than the support prices. This considerably differs from last year, when there were no export orders with textile companies, and farmers were forced to sell under pressure, compelling the State and Central governments to acquire cotton to ease the crisis.

Erratic cotton future prices at New York Mercantile Exchange, is the major intimidation to India's exports, currently. If the Nymex futures were to drop further, cotton from USA, world's leading exporter, will be more affordable for Chinese and Indian textile companies to import from there.

For India, fortunately US has already traded one third of its crop but, there is still a concern over response of Chinese buyers. At present Indian cotton is being exported by offering hefty discounts to American and even West African cotton and if there is a reduction in discount, then Chinese exporters would all of a sudden find better choice of suppliers in the market to choose from, apart from India.

Since the inception of credit crisis in September 2008, the international cotton prices also had a sharp converse correlation with dollar, signifying that as the dollar perked up, the prices of cotton tended to fall and vice versa.

Fibre2fashion News Desk - India

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