Rising local demand cuts South Asian cotton exports
Rising local demand cuts South Asian cotton exports
SINGAPORE (Reuters): Climbing demand from textile mills in India and Pakistan, and lower local crops, are likely to curb South Asian cotton exports in coming months, opening up markets for Australia, industry sources said on Thursday.
"Higher mill consumption, a fall in production and high domestic prices...so, where is the chance for exports?" said one somber Indian cotton exporter.
Australian cotton producers said recently new spinning markets in India, Pakistan, Bangladesh, Sri Lanka and Turkey pointed to good regional prospects for their cotton exports.
The textile industry in India and Pakistan is performing strongly, with Indian officials saying cotton textile exports are growing at more than 10 percent a year.
"The demand for our cotton textiles is fairly strong from Europe and the United States, even from countries like Bangladesh," said D.K. Nair. secretary-general of the Indian Cotton Mills Federation.
It's a similar story in Pakistan. Last year's low cotton prices boosted yarn and textile exports and textile mills have invested millions of dollars to import machinery to expand spindle capacity.
Demand for cotton from Pakistan's textile industry could hit 9.5 million bales (375 lbs each) this year compared with last year's 9.2 million bales, cutting exports to 500,000 to 600,000 bales from last year's 800,000 bales, industry officials say.
Output from the current crop could exceed the official target of 9.7 million bales, but would still be below last year's level of 10.5 million bales, they say.
Adding to exporter woes, the government recently raised cotton state support prices, a move which traders feel could push up domestic prices further and make exports uncompetitive.
Exporters are banking hopes on a recent drop in the value of the rupee. "We are still one of the cheapest in the world and even government support won't hurt exports much," Maqbool Sadiq, chairman of the Karachi Cotton Association, the country's premier cotton trading body, told Reuters.