The rise in domestic prices has made cotton uncompetitive in the global market.
Cotton export is expected to drop by over 10% to 6 million bales in the current year ending September due to rise in domestic prices which have made the natural fibre uncompetitive in the global market.
The country had exported 6.7 million bales (of 150 kg each) in the 2014-15 marketing year (October-September). Major export destinations include Bangladesh, Pakistan and Vietnam.
"So far, we have exported 5 million bales. No further exports are taking place now because global prices are cooling and domestic prices are on the rise. Total cotton exports would be around 6 million bales in 2015-16," Cotton Corporation of India (CCI) Chairman and Managing Director B K Mishra told.
The domestic prices have increased by Rs 1,000 per candy in the last few days to Rs 34,000-35,000 per candy. "I think the rising price trend will continue for some time till the new crop comes from October," he said.
Mishra said the rates have gone up due to estimates of fall in domestic cotton production to 35.3 million bales in 2015-16 from 38 million bales in the previous year due to drought.
Consequently, traders are not exporting cotton as they are not getting good margins in the global market and see better prospects in the domestic market, he said.
Much of the Indian cotton has been exported to Pakistan, which stood at 2 million bales so far this year, he added. The CCI, which buys cotton from farmers when rates go below the support prices, said it has procured 8,40,000 bales so far this year.
With cotton prices rising, Mishra said, "I don't think any more procurement would happen as prices are ruling above the minimum support price level."
Of the total procured cotton, the CCI has already sold 3,75,000 bales and the rest of the stock will be disposed of in the coming months, he added.
Last year, the CCI had procured 8,70,000 bales.
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