India is looking at windfall gain from the cotton market due to the recent onset of hurricanes in the west. The world´s top cotton buyers, all in Asia is looking to India to supply the deficit in cotton after fierce storms in the United States affected the size and quality of the crop, dealers said
In the past week alone, India, sealed deals to sell about a million bales to China, Taiwan, Vietnam, Pakistan, Bangladesh and Indonesia – key garment suppliers to brands such as H&M, Inditex-owned Zara and Wal-Mart Stores Inc. That compared with 300,000 bales in the two weeks before. Dealers expect contracts similar to last week which could help India´s exports grow by a quarter in the 2017/18 season beginning October. “Indian cotton has great chances this year,” said Chirag Patel, chief executive at Jaydeep Cotton Fibers Pvt Ltd, a leading exporter.
Other cotton producers like Brazil and Australia could benefit from lower supplies from the United States, but may find it difficult to match the price offered by India, where a bumper harvest is likely to keep the rates lower.
Farmers are likely to harvest a record 40 million bales of cotton in the 2017/18 season beginning Oct. 1, 2017, bringing domestic prices down and making exports even more competitive, Patel said. For the new 2017/18 season, farmers have planted 12.1 million hectares with cotton, up 19 percent from a year earlier, farm ministry data showed. India harvested 34.5 million bales of cotton in the 2016/17 season.
Favorable crop conditions would help India sell 7.5 million bales of cotton on the world market in 2017/18 against 6 million bales in the previous year, said Nayan Mirani, partner at Khimji Visram & Sons, a leading cotton exporter.
Hobbled by the rising rupee and unattractive global prices, India was struggling to sign export deals until a few weeks ago. But a recent rally in global prices made overseas more sales competitive. Other than attractive prices, close proximity encouraged most Asian buyers to turn to India. While cargoes from the United States take about 50 days to reach Vietnam, Bangladesh and Pakistan, India can ship its cotton in two weeks.
Current market trends give cotton buyers a chance to look at alternative supplies, said Vu Duc Giang, chairman of Vietnam Textile and Apparel Association. But forecasts of higher global output will ease concerns over cotton supplies, Giang said.
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