Textile mills, either in India, Pakistan or Bangladesh, do not seem to be scrambling to book cotton stocks in advance despite reports of a fall in cotton production in India and Pakistan, both major cotton producing countries.
According to the Cotton Advisory Board (CAB) of India, cotton output may be down by around five percent to 33.4 million bales of 170 kg each in 2012-13 from 35.3 million bales in the previous season.
In the first week of November, the Cotton Crop Assessment Committee (CCAC) of Pakistan informed that production will touch 12.66 million bales during current season, against 13.3 million bales last year.
Mr Jahangir Alamin - Managing Director of Fuad Spinning Mills Ltd - Bangladesh does not seem overtly concerned by the reports of low production in both India and Pakistan, despite Bangladesh importing over 30 percent of its annual cotton requirement from India.
He says, "I do not foresee a shortage of cotton in the world in the ongoing season. China which is a big importer of cotton, may not import in quantities it purchased in the previous season as it has a stock-to-use ratio of around 100 percent".
He adds, "There may be not a big mismatch between demand and supply in this season. Also the crop in other countries like Uzbekistan, African countries, Brazil is good. So there is no reason to press the panic button".
However, he was apprehensive about the Indian government banning or capping cotton exports due to the low production, as witnessed in previous years. "Past experiences suggest that there is a possibility of this happening so", he informs.
However, his apprehensions may be misplaced, as two influential textile lobbies in India – Confederation of Indian Textile Industry (CITI) and South Indian Mills Association (SIMA) have informed fibre2fashion that, they do not favour banning or capping raw cotton exports.
Mr Abid Farooq, Managing Director of Ali Akbar Spinning Mills Ltd - Pakistan informs, "There are ample cotton stocks around the globe and at the same time, consumption of cotton is expected to decline in China this season".
He adds, "We are all very careful this year, as all of us took a beating last year, due to the widely fluctuating prices. We are willing to pay a higher price in the future if needed, rather than stock or book in advance."
On a possibility that India many ban or cap cotton exports, Mr Farooq said, "With the bearish trends prevailing in global cotton markets and so much stocks lying around, the fears are misplaced, I do not see that happening".
Mr RS Saraogi - Whole Time Director at Asarwa Mills Ltd – India says, "I do not foresee any shortage, as instead of importing raw cotton in previous years, China is importing cotton yarn in huge quantities this year, which will mean fall in cotton exports, in turn will mean adequate cotton stocks in the Indian markets"
