India is struggling to export cotton despite higher production. The reason is farmers are holding out for higher prices. Harvesting of the new crop started last month, but many farmers are not willing to sell. They are holding crops hoping prices would rise like they did last season.
Farmers received record prices for their last season’s crop, but the new crop is unlikely to get the same price as domestic production has risen and global prices have fallen. Farmers have used proceeds from the last few seasons’ harvest to create storage facilities, which they are using to store the crops. Indian traders so far in the new season have contracted 70,000 bales for exports, significantly lower than more than 5,00,000 bales contracted during the same period a year ago.
Bangladesh, Vietnam and China are among the key buyers of Indian cotton. Limited supplies are keeping domestic prices significantly above the global benchmark, making overseas sales unviable from the world’s biggest producer of the fiber.Cotton prices hit a record high of Rs 52,410 in June. But prices have corrected nearly 40 per cent from the peak.India produced 34.4 million bales of cotton in the 2022-23 season that started in October, up 12 per cent from a year ago.