Yarn prices have stopped rising in India after being significantly increased in the past weeks. Cotton prices have also stabilized after sharply falling in the past three months. Cotton exports are however expected dropping this year whereas imports would be supported by the fall of prices on the international market.
Spun yarn prices have stopped rising in India, over a continuous fall of cotton fiber prices and weaker demand from downward processors.
The benchmark cotton indicator has lost more than 8% in three months in rupee terms, reflecting a lack of demand from foreign customers.
The Indian currency has rebounded at the end of last year, therefore limiting the competitive advantage of cotton exporters in dollar terms.
The sharp fall of cotton prices on the international market is also reducing demand for Indian cotton.
The Cotton Association of India (CAI) hast just cut its export forecast for the current season from 6.9 in 2017-18 to 5 million bales in 2018-19.
State-controlled agencies have also begun buying large quantities from the last crop in order to support prices above new minimum levels.
About 850,000 metric tons would have already been purchased and total buying could reach 1.5 million bales at the end of the season.
Minimum support prices have been sharply raised this year, ahead of the general elections, and a new rise is now requested over a jump of production costs for cotton farmers.
Such a policy could however limit exports whereas boosting imports.
Source: Emergingtextiles
