Rising Cotton Prices Lift Yarn Exporters'' Spirits

The rising international raw cotton prices have lifted sentiment for India''s yarn exports. The good news is that not only has there been consistent enquiries from the importers but also an increase in the offer price by 15 per cent to 18 per cent over last year''s rates for the Indian supplies.

There has been surge in demand for yarn from principal buyers from Korea and Hong Kong since the beginning of this month. Exporting mills and merchant exporters are said to have contracted orders for next month delivery at prices higher by some 15 per cent, the trade and industry sources say.

Yarn market sources said the shipments booked by the Korean and Hong Kong buyers this month, for example, were for $2.95/3 a kg for combed 40s count as against last year''s rate of $2.5/2.6. The 30s combed cotton shipment booked this month was for $2.60 against last year price quote of $2.20.

Sources told Business Line that the prospects of an easy domestic cotton crop this year and the prevailing 20 per cent or so difference in the price between indigenous cotton and the international cotton coupled with the prospects of drop in the China and Pakistan crop appear to be working in favour of Indian yarn shippers.

The average current Indian cotton price (Shankar-4/MECH varieties) is being quoted at Rs 25,000 per candy for spot delivery. As against this, the new crop of American/West African varieties for November/December deliveries are being quoted at 79 cents and 77/78 cents respectively which translated to Indian price equivalent should work out at Rs 31,500 per candy.

The bullish cotton and cotton yarn market trend being seen right now is expected to last for another three or four months, the sources said. Though some mills have already concluded their export sale for next month delivery, quite a few yarn exporters / exporting units are said to be hesitant to firm up export orders for next month supplies, considering the possibility of further price increase for cotton yarn over the next few weeks.