India's Feb cotton exports to hit 2-yr high as discounts lure buyers

Credit: REUTERS/AMIT DAVE

By Rajendra Jadhav

MUMBAI, Feb 15 (Reuters) - India's cotton exports in February are set to jump to the highest level in two years, as a rally in global prices has made Indian cotton attractive for Asian buyers who earlier sourced the fibre from Brazil and the United States, traders said.

Before the benchmark U.S. cotton futures CTc2 hit a 17-month high this month, India, the world's second biggest cotton producer, struggled to export the fibre. But, after the sharp rise in global prices, buyers have started to flock to India, five traders said.

In February, Indian traders signed contracts to export 400,000 bales (68,000 metric tons) of cotton - the highest since February 2022 - mainly to China, Bangladesh and Vietnam, they said.

"Indian cotton is now very competitive. It is the cheapest in the world, and exports are picking up," Atul Ganatra, president of the Cotton Association of India told Reuters.

India could export 2 million bales in the 2023/24 marketing year to Sept. 30, surpassing the earlier expectation of 1.4 million bales, he said.

But a few traders feel exports could rise to 2.5 million bales, as Indian cotton is 6 to 7 cents per lb cheaper than the supplies from the United States, the world's biggest exporter.

If Indian cotton continues to trade at a discount to the global benchmark, traders are expected to export 300,000 bales in March, said a New Delhi-based dealer with a global trade house.

Aggressive Chinese buying lifted U.S. cotton prices in the past two months and now Beijing is making purchases from India, said a Mumbai-based trader.

"China has made purchases of around 300,000 bales for shipments in February and March," the trader said.

Currently, India has the advantage of lower prices and lower freight costs compared to the supplies from the United States and Brazil due to its proximity to importing countries, said Vinay Kotak, director at Mumbai-based Kotak Ginning and Pressing Industries Pvt. Ltd.

Despite robust demand, India's exports would be capped by limited surplus as local production is expected to fall this year, Kotak said.

The country's cotton production could fall 7.7% from a year ago to 29.41 million bales in 2023/24, the lowest since 2007/08, according to the Cotton Association of India.

(1 Indian bale = 170 kg)

(Reporting by Rajendra Jadhav; editing by Mayank Bhardwaj and David Evans)

((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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