The Telegraph
Since 1st March, 1999
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Farmers cotton on to China gap in world market

Mumbai, Nov. 23: Cotton growers in the country are upbeat with the market currently on an upswing due to a poor Chinese crop and prices rising by 30 per cent. Moreover, a surge in international demand for the natural fibre is expected to multiply exports more than 10 times this year.

While the buoyancy has come quite soon in the new season (Indian season begins in October), it is China, the world's biggest consumer, which is responsible for surging international prices of the fibre.

According to industry analysts, China, which consumes nearly 7 million tonnes of cotton, is set to import around 2 million tonnes of the fibre following projections of a poor crop. Adverse weather conditions have been blamed for a lower production forecast of around 5 million tonnes in the country.

Pakistan, the fourth largest producer of cotton, is also anticipating an over 10 per cent lower yield due to pest attack.

The Chinese factor has resulted in the price rise of major varieties here by more than 35 per cent over last year. While New York cotton futures have risen over 40 per cent, many countries are now looking at India to meet the shortage.

This surge in demand for Indian cotton has come at a time when production in the country is being put at 165 lakh bales, a 21 per cent jump over last year's 136 lakh bales.

“Many countries are showing interest in sourcing cotton from India. The latest among them is Malaysia and there are others like Bangladesh and China,” a source said. This interest should result in over 5 lakh bales being exported from India, sources added. This marks a 10-fold increase over 50,000 bales exported last year.

Sources aver that though domestic cotton prices have been showing signs of softening of late due to increased arrivals, the international demand for the fibre is likely to keep prices firm.

Cotton yarn, too, is dearer by 15 to 25 per cent in line with the raw material prices.

Sources here added that export demand for cotton yarn have also shot up in recent months with buyers in some countries increasing their offer price by over 15 per cent.

However, the upsurge in cotton prices has led to disenchantment among fabric producers, who have been facing the pinch of rising prices and limited supplies of the fibre as growers are keen on its exports.

This grievance has led to calls for banning exports of cotton till stability in their availability is attained.

Industry watchers, however, do not expect the government to oblige such a demand in view of the upcoming elections.

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