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India’s cotton exports on the rise, could rally global prices

India’s cotton exports have been gathered pace after global prices jumped to four-year highs. Increased supply from India could rally international prices and likely compete with shipments to Asia from exporters such as Australia, Brazil and the United States.

Bangladesh, Vietnam and Pakistan are aggressively buying from India due to lower prices. India has a freight advantage over others. India could export more than six million bales in the current season, up a fifth from previous estimates.

Indian merchants have contracted to export 4.7 million bales so far this marketing year, of which nearly 3.5 million have already been shipped. The country exported 5.82 million bales of cotton last marketing year. A depreciation in the Indian rupee has also boosted exporter profits, stoking the appeal of sending cargoes abroad.

The upturn in exports marks a change from just a couple of months ago, when lower global cotton prices meant there was little incentive to ship overseas. Demand from Pakistan, which resumed imports from India in January after making no purchases in the previous quarter, has been strong and the country could take as much as 8,00,000 bales this year. However, India’s production of cotton bales for 2017-18 may be down 1.4 per cent from an earlier estimate as the pink bollworm pest has hit some crops in key growing regions such as Maharashtra.