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Indian cotton exporters drop orders

Indian cotton exporters have cancelled orders for around 25,000 bales and postponed shipments of about 200,000 bales by up to a month since a supply shortage has pushed up local prices. The move by the world’s biggest cotton producer is likely to help rival suppliers like Brazil, the United States and some African countries boost exports, with some India textile mills even starting to import cheaper fiber from overseas.

Contracts to export nearly 25,000 bales to Pakistan and Bangladesh have been cancelled. Raw cotton supplies usually peak in India between December and February, pushing down prices. This year, local prices have jumped more than 10 per cent over the past two months, with farmers now delaying cotton sales in expectation of further price rises.

Right now Indian cotton is not competitive. Export demand is not much. India has exported around 2.5 million bales so far in the 2016-17 season. In 2015-16 India exported 6.9 million bales, but this year exports could fall to five million bales. Exports will pick up only if Indian prices come in line with international prices.

Pakistan, Bangladesh, China and Vietnam are key buyers of Indian cotton. Farmers are likely to release stocks if local raw cotton prices rise another five per cent but the delay could see local exporters miss out to rivals.