Date:17/04/2007 URL: http://www.thehindubusinessline.com/2007/04/17/stories/2007041701051200.htm

Back 1.5 lakh bales cotton imports in the offing

G. Chandrashekhar

Shipments to arrive in 25 days

Mumbai April 16 Even as exports of cotton continue, imports are set to begin. Indian importers, mostly cotton textile mills, have already contracted an estimated 1.5 lakh bales.

The consignments are likely to begin to arrive in the next 20-25 days and may be discharged in one of the southern ports.

A major part of imports would be West African origin and some parcels would be from Brazil.

The imported cotton would be of 28.5-29 mm staple length, which meets specific requirements of mills.

Notwithstanding a bumper harvest, variously estimated between 260 lakh bales and 270 lakh bales (170 kg each), domestic prices have been rising.

Cotton arrivals had peaked by February. After registering about 240 lakh bales, arrivals have levelled off and are currently at an estimated 30,000-35,000 bales a day.

With rising domestic prices in recent times, importers have found good parity for buying cotton from abroad.

The firming rupee, too, is seen to have contributed to price parity. The price of the popular variety, Shankar-6, had crossed Rs 20,000 a candy recently.

With the news of imports trickling in, a correction in prices is already evident.

S-6 prices have declined to Rs 19,600-19,800.

The price of imported cotton would obviously have to be lower than current Indian market prices for the imports to be feasible.

Commenting on the development, Mr Shirish Shah of Bhaidas Cursondas & Co, one of the oldest firms in the cotton market, told Business Line that imports may help cool the domestic market somewhat.

Simultaneous exports and imports of cotton is an indication of the market's health, he added.

There are doubts about international cotton prices firming up from the current levels despite rising Chinese import demand.

The US is reportedly holding large inventory, which will ensure adequate availability.

Weather conditions from May to September will also have to watched in major origins such as China, the US, India and Pakistan.