Cotton exports in marketing year (MY) 2006/07 are forecast to increase to 3.5 million bales as a fall out of large carryover stocks and expected higher production, assuming the current parity of local cotton prices vis-?vis international prices holds. India emerged as a significant exporter of cotton in MY 2005/06 (August-July) and is estimated to have exported 3.2 million bales.
On the other hand, MY 2006/07 imports are forecast at 500,000 bales, stagnant at 2005/06 level, consisting largely of ELS and longer staple specialty cotton. However, the relative price movements of local cotton vis-?is world cotton during the upcoming season may temper these forecast trade volumes.
A report by Global Agriculture Information Network (GAIN) stated in addition to the large carryover stocks and near record production, firm international prices during most of MY 2005/06 helped export prospects. Based on official data for the first six months of the fiscal year (FY), cotton textile exports for FY 2005/06 (April-March) are estimated to increase by about 14% over the FY 2004/05 level of $3.4 billion. Exports of readymade garments (mostly cotton-based) are expected to grow 34% over the FY 2004/05 exports of $6.2 billion. India? competitiveness in the post-Multi Fiber Agreement (MFA) quota system will likely fuel double digit growth in cotton textile exports, which should allow it to capture an increasing share of the global textile trade over the next few years.
India will be in the export market for the next 2-5 years, until domestic consumption catches up with the recent production surge. Most exports will be of medium-to-long staple cotton (25 to 32 mm length) to neighboring countries, China, and various Far East destinations. Traditionally, Indian cotton used to be discounted by five to six percent vis-?vis comparable international cotton because of lower quality (higher trash, lower consistency, etc). But in the last two years buyers of Indian cotton have expressed satisfaction with the quality, and now offer competitive prices.
India will continue to import mostly ELS and quality long staple cotton (28-34 mm), with occasional imports of medium staple cotton when international prices are favorable. The United States has emerged as the leading supplier of cotton to India over the past few years. Indian mills that import US Pima and upland cotton are appreciative of its quality and consistency, and this impression has been cemented through trade servicing missions by the Cotton Council International and SUPIMA.
However, US cotton prices will have to remain competitive to offset the freight advantage and shorter delivery periods enjoyed by neighboring suppliers like Egypt, West Africa, the Commonwealth of Independent States (CIS), and Australia.
